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Google AdWords Forum

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AdWords Changes: Minimum bids, No more 'on hold', etc.
My Interpretation

 7:23 pm on Jul 21, 2005 (gmt 0)

Information based off of info provided by Google. However, it's still my interpretation of what they intend, and some details could be inaccurate/changed by the live date.

Minimum bid changes

  • Keywords will have minimum bids associated with them.
  • These minimums are based off of the Quality Score as previously stated.
  • Minimum bids will be different for each account and each keyword within that account.
  • Minimum bids will be dynamic. They will change at most once per day.
  • Minimum bids can change due to changes in search volume, changes in CTR for that keyword, etc. This can make it so that you can have a keyword below the minimum bid inactive, but if the minimum bid drops, your keyword will suddenly become active.
  • Slowing of accounts will be gone.

Christmas widget
Off season, low quality keyword with low CTR, higher minimum bid.
During season, CTR is higher, keyword is more relevant, lower minimum bid.

Disabled Keywords

  • If a keyword is currently disabled, it will remain disabled in the new system.
  • After approximately one month, the disabled keywords will be deleted.
  • You can delete the disabled keywords yourself and add them as active keywords once the new system goes live.
  • In trial, on hold keywords will go active. If you're bidding high for them in effort to make them show - fix it now.

Keywords which would have been disabled, and therefore you couldn't bid on them no matter what you did, will now have a minimum bid associated with them so you'll be able to bid on that keyword no matter what.

You can add keywords with bid prices. If fluctuations happen that means they're above the min price, they'll show. If the min price goes above the max bid, they'll be inactive (paused). This also makes it so that you can leave keywords you'd like to bid on, but aren't essential, in your account and let the system kinda take care of it.

Side effect
You can pause individual keywords by making a keyword bid below that minimum bid.

Bidding Changes

  • The adwords discounter (paying $0.01 above your competitor) is still in effect.
  • If your minimum bid is above what you should pay based on the ad discounter, then you will pay the minimum bid. (i.e. if the discounter says you should pay $0.15, however, your minimum bid is $0.20, then you will pay $0.20).

There will be an active/inactive keyword report.
This report will also be available through the API.

Interface change

  • In the interface, where you see 'normal', 'in trial', etc right now, it'll be replaced with 'active' or 'inactive'. The 'inactive' is now a link where you'll be able to get more info about the keyword.
  • In the interface, you'll see the minimum bid prices next to the keyword level bid price.[/li]

Bulk Upload
A new bulk upload sheet will be necessary once the new system is implemented. It will have an additional line for minimum bid per keyword.

Approximately one month.
Google will make another announcement before the change actually happens. They're really giving us time to make changes and get ready for this.

[edited by: eWhisper at 1:57 am (utc) on July 22, 2005]



 12:54 am on Jul 23, 2005 (gmt 0)

Or their minimum bids get too high.

In some cases, the bids almost can't get to high because the desire is exposure just as much as traffic. This tends to be among the entertainment industry in particular but if the CPC was $50.00 and the effective CPM ended up being a few bucks, that would be just fine.

While small business/regionally targeted campaigns do tend to get pushed down by the larger advertisers, if the local companies take the time to write quality ads they can compete. If you write better ads, set the CPC high enough to get some initial traffic, targeted as can get much higher CTRs than generic stuff. It doesn't always work but often does.


 3:37 am on Jul 23, 2005 (gmt 0)

Ok the way i see (as an adsense user not an adwords user) this could be great because my keywords i doubt will fluctuate, they are things like C++ game programming and Diablo 3 the later of which when the game is official annouced porfits would boom right cause demand for those kinda ads would go up becuase of interest in that right?


 4:28 pm on Jul 23, 2005 (gmt 0)

I think this may turn out to be a good thing.

We have lots of keywords on small niches that we've had to stop, because they weren't profitable at 5c. They may however be profitable at 2c or 3c. Dropping an arbitary minimum bid is a good thing - if it lets these niche keywords run, and find their own market value.

Similarly, there are content areas of my site that I can't afford to advertise at 5c - but I would want to advertise at 1c. Under the new system, we could run ads for those content pages - and everybody wins - we get traffic we wouldn't otherwise have got, surfers get to see relevant content, and Google makes money it wouldn't otherwise have made.

I always thought an arbitrary blanket minimum bid was a bad idea - and that keywords should be allowed to find their own level in the market. If this is a step in that direction, then I'm all for it. Well done Google.

At least Google isn't as greedy as Overture (or whatever it's called today - some of the terms in my DB still say GoTo - remember them?). In the UK, they have a blanket minimum bid of 10p - that's about 17c!


 8:52 pm on Jul 23, 2005 (gmt 0)

As far as Google goes... I tend to disagree with many of the naysayers. Google isn't trying to get more money out of their advertisers... they're trying to squeeze more clicks out of their searchers (and the bi-product will be more money for them). Google knows that the more relevant the ads, the more clicks they can generate. Also, in the long run, if the results in the right bar are VERY relevant, then searchers will look there more and will click there more often. This is a concerted effort to increase the relevance of the ads being shown in the "sponsored" section. Google’s banking on the same principle they've banked their entire business model on since the beginning. Relevance is KING. Whether it's organic or paid, Google wants the searcher to find EXACTLY what they are looking for. The latest (reported) changes are just another step for them to weed out those people who either:

a) Bid on irrelevant terms to drive traffic
b) Write bad generic descriptions and don't generate clicks
c) Arbitrage the Adwords/Adsense system

Get rid of all three. None of those help the end user. Those three types of advertisers drive up costs for those if us who are actually providing relevant content and products and providing something valuable for searchers.

This will be good for advertisers and searchers in the long run and it will hurt those who are doing well in the organic listings. Not a lot initially, but in the long run, the organic results will get less clicks because the sponsored results will be more and more relevant. In fact... they might even be MORE relevant over time than the Organic listings in some cases.


 8:57 pm on Jul 23, 2005 (gmt 0)

With regards to Yahoo...

Yahoo/Overture is foolish. When they want more money, they increase the floor. Where’s the innovation? They’re just a glorified Looksmart. It's only a matter of time before they crank it to .15. The day WILL come... and it will be sooner rather than later. Yahoo and Google are two very different companies. Google lets the searchers and the market determine prices. Yahoo let’s the shareholders determine prices. Once again, Google goes for relevance and then cashes in. Yahoo just worries about the quickest way to make $. Look at Yahoo’s organic search results. You would swear they were providing horrible organic results just to increase clicks on Sponsored listings.


 11:02 pm on Jul 23, 2005 (gmt 0)

I see alot of posts seem to predict that this sort of system will remove abitrage from Adwords.

You must remember that the more complicated a system becomes, the more potential there is for arbitrage. The new algorithm, IMHO, actually opens the door for more arbitrage.

My guess is that the top affiliates will be the first to discover the "Secret formula" behind the Quality Score, and once they do that, they will definitely be able to get clicks cheaper than the average advertiser, make no mistake.


 11:11 pm on Jul 23, 2005 (gmt 0)

Previously the Ad Rank consisted of just Max CPC x CTR.

The new Quality Score could consist of the a number based on the following relevancy criteria:

1. Locality (the more granular (city versus country, etc), the higher the score).
2. Max CPC
3. CTR
4. Conversion Rate data
5. Ad Copy
6. # of Keywords in Ad Group
7. Relationships of keywords in Ad Group
8. Daily Budget

Probably a whole lot more if you sit down and think through it... so I'm sure it makes sense that affiliates will most surely be the ones to crack this formula first and put it into use first, in most cases, trumping high paying advertisers.

If Google is going for relevancy, price becomes less of an issue.


 12:46 pm on Jul 24, 2005 (gmt 0)

Unless I'm forced to make major changes...I'm planning on sitting back for a couple of weeks and riding out the initial fluctuations. I think there will be a lot of companies (big and small) who will initially take the "at all cost" attitude with their new or poorly set up accounts and those people will pay huge amounts of money for top bids before they give up or go bankrupt.

I also think that many of the people who think they were beating Google's old system with their huge campaigns and millions of keywords...will also bite the dust in the next coming weeks as they become overwhelmed with the keyword management aspect of Google.

In a lot of ways, I think the new system will be like managing a huge Overture account just with more flexibility on the number of terms you can have and the ability to change ads at will. With Overture, it's too time consuming and tedious to manage the keyword bids one at a time. To be competitive, it's almost a necessity to invest in bid management technology if you want to succeed in Overture...I think we may be headed in that direction with Google in light of the changes that are about to be made.


 5:22 pm on Jul 24, 2005 (gmt 0)

Remember, #4, 5 or 6 is sometimes a better place to be.

A targeted ad for "very specific widget style #7" will get a click from a searcher who finds positions #1-3 occupied by the big advertisers who bid a fortune on "widget", but their destination URL is their home page and they may or may not have "style #7" so I'm not that worried.

Should I be?



 2:06 am on Jul 25, 2005 (gmt 0)

Relevence is the key but will the searcher be put off by the lack of relevence if the top spots are all just bid to be seen spots?

This change actually has the ability to remove relevence from the adwords.


 3:40 am on Jul 25, 2005 (gmt 0)

This change actually has the ability to remove relevence from the adwords.

I hadn't thoguht about that. Clearly, the reason for the change is to increase relevance, but those companies who are just interested in branding may actually remove relevance and throw a wrench in G's plans. I hadn't even considered that. But that is indeed possible.

The answer? My guess is that Google won't show the top 3 ads of companies just looking for exposure. If the click-through-rate is really low, the ad won't even get shown... or will get shown way down the list (even if they are bidding a high amount per click). Advertisers with higher CTR will get listed higher (not unike the current system). Low CTR's will get frozen.


 6:43 am on Jul 26, 2005 (gmt 0)

I had a basic question? Everybody on this chain seems to think that this will be the end of adsense/adwords arbitrage? Why do we expect this to happen? Do adsense/adwords arbitrageurs using some specific algorithm?


 10:08 pm on Aug 3, 2005 (gmt 0)

I am still not clear whether the AD discounter will work or not for words with a min CPC.

Here is the quote from eWhisper about it.

If your minimum bid is above what you should pay based on the ad discounter, then you will pay the minimum bid. (i.e. if the discounter says you should pay $0.15, however, your minimum bid is $0.20, then you will pay $0.20).

This is the quote from the Adwords Blog

Question no. 3: Are you going to continue to discount ads?
As always, the AdWords discounter will continue to reduce your actual cost-per-click so that you pay the lowest possible price for your ad.

AWA any way you can clarify that, as I feel that it is critical for the way we bid, especially for the top positions where there is a lot of difference in the Max CPCs.


 11:48 pm on Aug 3, 2005 (gmt 0)

Let me see if I can clarify Inasisi - which first calls for reviewing what 'minimum bid' means.

The minimum bid is the minimum that you may pay per click in order for the ad to show for a particular keyword. To put it another way, it's the lowest possible price you can pay to have the ad show.

So, if the discounter were to discount below the minimum bid required for the ad to show, then, by definition, the ad couldn't show.

Thus, the discounter can not discount below the minimum bid.

I hope that clears it up. ;)



 4:01 am on Aug 4, 2005 (gmt 0)


Thanks once again for that absolutely clear explanation. It would be better if the Adwords Blog had also been this clear.


 12:41 pm on Aug 4, 2005 (gmt 0)


Apologies if this question has been answered before. If you have a major improvement in the CTR of an ad that is subject to paying a minimum bid above what the discounter would otherwise indicate that you should pay, will the minimum bid ever reduce. Conversely if you run an ad paying the minimum bid but it has a horrible CTR will the minimum bid increase?


 2:54 am on Aug 5, 2005 (gmt 0)

If you have a major improvement in the CTR of an ad that is subject to paying a minimum bid above what the discounter would otherwise indicate that you should pay, will the minimum bid ever reduce. Conversely if you run an ad paying the minimum bid but it has a horrible CTR will the minimum bid increase?

Short answer: yes, and yes - although I'd substitute Quality Score for CTR in your question.

Think of the minimum bid as a financial incentive be very relevant, and to run really targeted Ad Groups. Basically, the higher the relevance (i.e. Quality Score) the less the minimum bid will be.

On the other hand, the lower the relevance (Quality Score) the higher the minimum bid will be.

The beauty of it is that highly relevant ads are quite likely to give you better results, and to bring you better qualified customers. So you may just get better results, and pay less at the same time.

Meanwhile, users see relevant ads, learn to trust AdWords ads over time, and continue to click. :)



 2:20 pm on Sep 2, 2005 (gmt 0)

From where can I view the maximum bid of a particular keyword so far?


 11:47 pm on Sep 2, 2005 (gmt 0)

From where can I view the maximum bid of a particular keyword so far?

anjanesh, I'm not 100% certain what you are asking, so I'll answer the question in two ways:

* If you were asking where you'd see the Maximum CPC that competing advertisers are bidding: this is information that the AdWords system does not provide. The main reason for this is that it is not only Max CPC the determines position. One's Quality Score is very important as well. For this reason, it is possible for someone with a very high Quality Score to appear above another advertiser's, while actually paying less.

* If you were asking where you would see your own Maximum CPC, then you'd look in your stats chart at either the Campaign level or Ad Group level of your account.

I hope this gives you the information you need. ;)



 3:00 am on Sep 3, 2005 (gmt 0)

CPC is Cost Per Click right?


 3:17 am on Sep 3, 2005 (gmt 0)

CPC is Cost Per Click right?

Correct. I've got to remember that not everyone is familiar with all the abbreviations. ;)



 7:16 am on Sep 3, 2005 (gmt 0)

Well...a poosible client is asking me :
Return the current max bid prices for each word from Google Adwords.
So I figured - like the max bid in a public auction.


 8:53 pm on Sep 3, 2005 (gmt 0)

Just looked at an adword, its a famous film and comic book hero.

Thousands of searches each day, 3 advertisers minimum bid £0.25p, now I wouldnt have thought such a general term would have converted well. you could be looking for anything related to teh film genre, so I wonder why this is so high?

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