| 7:51 pm on Jul 21, 2005 (gmt 0)|
Thanks once again for succintly pointing all the changes that are going to take place. The one thing that was startling in your post was the reference to the ad discounter
|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 $0.20). |
This is the quote from the Adwords Blog
|Question no. 3: Are you going to continue to discount ads? |
As always, the AdWords discounter will continue to reduce your actual cost-per-click so that you pay the lowest possible price for your ad.
Now what Google has said is not completely contrary to what you have posted but still doesn't tell the story clearly as to what it is going to do. Now if what you are telling turns out to be true, then Google is turning out more and more to be like M$ - tell something when you actually mean something else and goes that much more to loose my respect.
| 8:03 pm on Jul 21, 2005 (gmt 0)|
Now, for personal opinion over interpretation.
Everything I heard makes total sense.
I'm in favor of every change IF (and this is a big IF):
1. The minimum bid prices don't get out of hand. Some of the PFIs and Shopping engines have decided keyword minimums based on verticals. However, because AdWords isn't always eCommerce, but a large variety of other businesses. If minimums start hitting $1 for keywords with only 3 advertisers - we have a problem.
2. Minimum price fluctuations. It's expected in the first couple weeks for prices to fluctuate quite a bit as the system is stretched by the advertisers. However, after that, changes need to be within a small percent margin and not widely varied each day.
3. Geo Targeting. A single word keyword might be terrible for a national campaign - but great for a local city campaign. The city should not suffer a much higher min bid because national advertisers couldn't make it work.
Honestly, the point that worries me the most is number 3. I think revenue and advertiser feedback will make 1 & 2 steady over time. Right now, it's still possible to hurt your own campaigns with national and regionals in the same campaign as Google doesn't have a geo hierarchy structure.
If a local dentist can't bid on 'dentist' for a regional campaign, but has to bid on 'chicago dentist' because of the minimum bid prices - then there will be an even further slowdown of local adoption in AdWords compared to YSM (sorry if this sounds like a rant, google.com has better local results than local.google.com does)
| 9:03 pm on Jul 21, 2005 (gmt 0)|
Nice succinct summary!
I agree with all your conjecture, however my understanding is that the minimum bid will be dynamic and will change virtually in real time, based on latest keyword response data whic determines the quality score, so in theory, you can pay less (or more) than your mininum bid, based on fluctuations in the quality score.
| 9:28 pm on Jul 21, 2005 (gmt 0)|
Does anyone think the average click will cost more. If the non stalled ads are allowed to be displayed at these high bids even though they are not relevent then it will push up all the bids in that chain.
Example is "widgets.com" decides to brand itself by buying every search. They bid .20 to be seen. they could push up the whole market and get very flew clicks do to lack of relevence.
| 11:02 pm on Jul 21, 2005 (gmt 0)|
I think I've read the minium bid may very per adgroup. That sounds like the Quality Score will be highly dependent on individual performance.
I also think this may drive up prices as advertisers want to bid on terms they just can't get know. These are often the ones that don't care about cost too much.
| 11:26 pm on Jul 21, 2005 (gmt 0)|
|I think I've read the minimum bid may very per adgroup. That sounds like the Quality Score will be highly dependent on individual performance. |
The interface I saw had a a list of the minimum CPC by keyword, so I'm pretty sure it's going to be by keyword.
Also, the processing power necessary to handle minimum bids in real time would be truly astounding. I think Google is also worried about it, and therefore it'll be a nightly or set interval update.
Again, this is all preliminary - one never knows how things will actually work until it's running.
| 12:48 am on Jul 22, 2005 (gmt 0)|
My thanks also for taking the time to post your summary.
1. Regarding item 1 in your first follow-up post, I'm certainly in favor of reforming the much aligned current keyword states . . . however I'm not at all convinced that having Google effectively set dynamic floor prices in thousands of different keyword markets is the way to go.
I'm reminded of what happens when "we know best" big government tries to get involved in picking economic winners.
Google should stick to being a market maker, not artifically influencing the value of bids as it will when it assigns a Quality Score.
You don't see eBay trying to affect the value of auction bids . . . they let the market decide the value of the merchandise.
2. Advertiser adoption of Yahoo Local ahead of Google Local . . . are there any stats on that? How far ahead are they?
3. It will certainly be interesting to see how much the Adwords Discounter dampens the effect of the scenario described by toddb.
| 1:10 am on Jul 22, 2005 (gmt 0)|
how is this going to affect adsense users (positive or negative) i do not use ad words but to me this sounds as if i could help me if my keywords cost more than .05
| 2:17 am on Jul 22, 2005 (gmt 0)|
Is this Googles way of raising bid prices without technically "raising bid prices"?
| 2:45 am on Jul 22, 2005 (gmt 0)|
>> If minimums start hitting $1 for keywords with only 3 advertisers - we have a problem.
This could turn into a huge problem for smaller advertisers like myself who run international geotargetted campaigns.
For example, say I have a widget store in my country. I can bid 10-15 cents for it and still have the ad show up in the front page (often in the north position) because most of the US "big money" advertisers have turned of international targetting.
Lets see how this unfolds.
| 2:56 am on Jul 22, 2005 (gmt 0)|
|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).
Huh? Did you mean to say maximum bid?
| 3:56 am on Jul 22, 2005 (gmt 0)|
|Huh? Did you mean to say maximum bid? |
|When you create a Google AdWords ad, you choose keywords for which your ad will appear and specify the maximum amount you're willing to pay for each click. You only pay when someone clicks on your ad. To save you even more money, our AdWords Discounter automatically reduces the actual CPC you pay to the lowest cost needed to maintain your ad's position on the results page. |
With the change, the above will remain true unless the discounted price is below your minimum bid price, in which case you will pay the minimum.
For more about the entire formula of bid pricing, please see: [webmasterworld.com...]
| 4:08 am on Jul 22, 2005 (gmt 0)|
Sounds like there are potential huge advantages to these changes and big drawbacks depending on how they are implemented.
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.
The lack of this feature is the largest obstacle to creating relevant ads on Google right now. Inputting detailed campaigns in mind numbingly slow and cumbersome.
If it will be possible to take an Overture/Yahoo style sheet and upload detailed ads, the early adopters of this should be able to crush the competition through the implementation of much more detailed ads.
The dynamic bid change will be very nice for advertisers who want to brand on keywords like dvds, movies, or other very general keywords.
The dynamic bid change could be a nightmare for smaller advertisers if big brand companies can blanket tens of thousands of keywords with typical branding mesages that are not relevant to the searches being performed. We'll have to see how it affects local advertisers.
Will the click-through rate be more heavily rated in the ranking algorithm than it is now? If an advertiser throws up a general ad with a $100.00 max bid for example, and gets a CTR of .001% but that results in a higher CPM and hence more revenue for Google than everyone else with much more targeted ads who is bidding $0.25 or less, is that ad that nobody clicks on going to rise above the others?
Will a certain CTR be required to get bumped up to the premium spot, or will it be the ads that make Google the most money regardless of relevancy that rise to the top?
Will these changes improve the user experience? We'll have to see.
| 9:15 am on Jul 22, 2005 (gmt 0)|
'...how is this going to affect adsense users (positive or negative) ...'
It's going to make Google more money, just like all previous Goto/Overture/Yahoo Searchstuff made them more money.
Remember, these are public companies who answer to stockholders - they have to keep increasing revenue.
They've signed up virtually everyone who is serious about ecommerce, which means that their ability to get NEW customers will slow.
The only way to keep growing is to think up new ways to get more $$$ from the advertisers they already have.
| 9:50 am on Jul 22, 2005 (gmt 0)|
The age of little guy is over.
| 10:18 am on Jul 22, 2005 (gmt 0)|
smells like the end of the adwords - adsense arbitrage.
| 10:26 am on Jul 22, 2005 (gmt 0)|
|smells like the end of the adwords - adsense arbitrage. |
Which is good, I think.
I personally hate seeing sites cooked for adsense revenue only funneling traffic through adwords.
I click the ad, go to the site and the only content I see is adsense blocks :((
| 11:08 am on Jul 22, 2005 (gmt 0)|
|The age of little guy is over. |
I don't agree. While in some areas where "the little guy" like me competes against huge firms then, yes, it is possible.
However in our niche I just don't see it happenning. We have competed side by side with the big booking comapnies for years. There has always been a place for us. It may make the game a little more expensive however there will still be a game.
| 12:08 pm on Jul 22, 2005 (gmt 0)|
How many of think they will see any serious volume of .01 clicks? The rare case where you are the only advertiser will you automatically get .01?
| 12:28 pm on Jul 22, 2005 (gmt 0)|
Do you think they will keep the same principle of broad match only actaully being full broad match if ad is deemed relevant enough?
| 4:37 pm on Jul 22, 2005 (gmt 0)|
This is a tad off topic but related:
Has anybody noticed what happens in AdWords when you do excellent keyword research and attempt to get decent rankings for REALLY DETAILED SPECIFIC keywords these days? ----- it's impossible!
Example: Say you are a little guy and set up a "local targeted campaign" for your "tinytown" area of a few thousand people and go after the keyword
"[small tough yellow widgets]" -- that's exact match folks -- and bid a max click price of say $0.10.
Heck, considering you are targeting only your local area and going after an exact and very specific keyword, you would think 0.10 would be plenty...
WRONG BUFFALO BREATH!
Google is not about to let you get away with that one -- plan on the max bid requirement for your very specific keyword being close whatever it takes to get top positions in a GLOBAL campaign with BIG bids for the non-specific keyword WIDGETS.
That's right... the little guy that targets very specific keywords even in a very small area has to complete with the bid prices for the rest of the world, just to make sure his ad even shows up!
Betcha, the new AdWords change won't do anything to improve this situation --- what does this prove? As said by others earlier in this thread:
|Big is in -- Big Guys, Big Budgets, Big Bids |
Sorry to be so off subject, but this issue is due to "another change" Google made a while back that virtually nobody took notice of. At least this time they are telling us of the change before it gets us.... lol
I have a great deal of experience (and frustation) with this type of AdWords issue and would be happy to start a new thread if it peaks anybody's interest.
| 4:59 pm on Jul 22, 2005 (gmt 0)|
So I have to get a bid manager now to constantly look at my kw's hopeing they don't just stop becasue I am below the min bid. It all sounds like a scare tactic to get people to bid more. Are they recruiting people from used car dealerships to make up these new rules.
This sounds a lot like selling water for $10 a gallon when a hurricane is comeing and normal price when there is not. This sounds illleagle to me.
There should be a set min bid the market will work itself out. If all of a sudden a term is busy people will bid more there is no reason to mess with it. Google has too much money and feels like it has to be doing someting. Sometimes things need to be left alone.
I do like that I can now bid on terms that were dissabled.
| 8:43 pm on Jul 22, 2005 (gmt 0)|
I believe that this new system can help many people who bid on less relevant keywords that before were ON HOLD or Disabled..
Personally I believe it will help, because less relevant/broader keywords seemed to give me good turnover clicks though the CTR was very low.
| 8:54 pm on Jul 22, 2005 (gmt 0)|
Sorry if I am naive, but what is turnover clicks?
| 8:58 pm on Jul 22, 2005 (gmt 0)|
This is a matter of getting in quick once these changes are implemented and creating the BEST quality ads you can, so you can quickly drive up your quality score and have ads show higher before the SLOWER big guys get going.
For those where ROI is king and matters a great deal we may see our ROI cut in half or even more, or we'll be seeing much less volume if we want to keep the same profit margins.
IF you want to continue seeing the same profit margins expect your ROI to plummet just because you will be paying more to compete with the bozos who have off topic ads, but pay HUGE for them just because they can.
I hope I am wrong, but this is how I see it happening.
| 9:56 pm on Jul 22, 2005 (gmt 0)|
My prediction is a short term burst of high bidding advertisers and irrelevant search results for Google as far as Adwords is concerned.
However, over a period of time, as ads/keywords for the big advertisers develop a very low CTR, the quality score will start pushing their ads down, maybe to the point they become inactive as their accounts develop poor performance.
Once things settle down, I think the advertisers that pay attention to their CTRs will come out on top.
Remember that Google won't make any money from an ad that doesn't get clicked.
| 11:14 pm on Jul 22, 2005 (gmt 0)|
|to the point they become inactive as their accounts develop poor performance. |
Or their minimum bids get too high.
| 11:18 pm on Jul 22, 2005 (gmt 0)|
|Or their minimum bids get too high. |
That's what I mean. If their quality score is particularly poor (and we know Google factors account performance into predicted CTR/quality score), then their minimum bids will be pushed higher and higher.
But how long will this process take?
| 11:28 pm on Jul 22, 2005 (gmt 0)|
Off season, low quality keyword with low CTR, higher minimum bid.
During season, CTR is higher, keyword is more relevant, lower minimum bid.
How will this work if I've bought the ads in low season, and kept it running until High Season. Is Google going to start harasssing advertisers to up their bids and notify them when they can reduce them again?
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