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AdRank, Affiliate Marketers and Max CPC

Scary questions that need answers!



5:46 am on Aug 31, 2005 (gmt 0)

10+ Year Member

Apologies in advance for the length of this post (I haven't written it yet, but it's been brewing for a while), but there are some issues about AdRank and affiliate advertisers that neither Google nor the Perry Marshalls of the world nor anyone else I've found can (or is willing to) answer, and IMHO, should scare the living hell out of anyone who thinks his/her ads are safely well-positioned on Google. If AWA or anyone else out there can provide some insight here, I and I'm sure tons of others will be very grateful.

I've experienced something fairly since the QBA (is that what we're calling it?) changeover, and strangely enough, it has nothing to do with minimum bids. The institution of the minimum bids had only good effects -- we're actually paying 1-4 cents for traffic that was profitable at 10-15 cents per click. However:

My company advertises using the GoogleCash method, and for those who don't know, that simply means we shell out our own money to run Adwords campaigns for other companies' products, and the only compensation we get is our affiliate commissions. If you know that business, you know that ever since January, Google displays only one affiliate ad per display URL -- and the lucky ad that shows will be from the account with the highest AdRank for that particular keyword. Easy enough so far, right? Right.

Fast forward to August. In the seven months since January, my company carves out a very strong position for three very profitable keywords -- we'll just call them KW1, KW2 and KW3. By "very strong position," I mean seven months of keyword history with average CTR of between 15% and 20%. Because of the AdRank we achieved on those 3 keywords, we were always the one affiliate ad that got served up. And because of Google's rule about showing only one ad per affiliate program, none of our competitors could ever even get an *impression* on these three keywords from January through August. Even maxing out the keyword bid couldn't displace us. It was, in essence, the Holy Grail of Adwords -- owning three very profitable keywords in a position so strong that we were unassailable by competitors. Life's good, right?

It was -- until the QBA switch. On the *very day* the switchover took place, our traffic for all three keywords died. I didn't even notice it until two days later (it was basically on autopilot due to the past six months of success). I searched on KW1, KW2 and KW3, and sure enough -- there was a competitor who was, by all appearances, outranking us on all three keywords. A brand new competitor, who had no chance of even getting an *impression* on these words for the past seven months, is now outranking our company, with our 7 months of 15-20% CTR per keyword, all alone in the blue strip atop Google.

It made absolutely no sense, but there was one way to regain position -- Max CPC. Even if our new competitor had a gargantuan bid, we could match it, and then our performance history would be combined with our new monster bid and we'd get our spot back. Right?

Nope. We raised bids to $20. $50. $75. All the way to $100. And we still didn't get the position back. And I apologize for being repetitive, but let me summarize this just one final time: **Since the QBA switchover, a brand new advertiser can come in and instantly outrank an established advertiser on each of three keywords with 7 months of 15-20% CTR and a $100 Max CPC.** If that makes absolutely no sense to you, then the line forms right behind me.

I did, of course, ask Google to clarify. I suggested one of two things: an internal error in Adrank calculation, or an Adwords employee (one who precisely understands "other relevancy factors" that comprise Quality Score that the rest of us can only guess at) had simply taken his/her proprietary knowledge and set up a shadow account on the side and is cleaning up at our expense. I was assured that neither is true (although I certainly haven't ruled out no. 2 myself). Google's response, boiled down, was this: "Sorry you're frustrated, but yep, you're outranked now. Don't ask why, because we can't talk about other accounts. Just trust us, you're outranked."

I trust 'em, all right -- we're still outranked and not showing for those keywords. But here's the catch-22 that Google won't comment on; in an environment where only one ad per URL will show, how can anyone OTHER than the top-ranked ad make progress toward a higher Adrank, if their ads, by definition, cannot be displayed? The natural answer is, "they can't", right? But that's NOT right, and we're the poster boy for it -- we owned the no. 1 spot for 7 months, and one day, bang -- we're gone.

All I want to know is -- how? The discussion, then, MUST return to these "other relevancy factors." Adwords Advisor has mentioned that AdRank is determined as it always has, based on Max CPC. That may be true -- it may be "based on Max CPC" -- but everything you've just read above (and again, I'm sorry for the length of this thing. I just want some answers), some element(s) of the overall AdRank formula have changed significantly. And the changes are significant enough to do major damage. These were three keywords that were netting us about $100-$150 in daily profit -- not retire-in-South-France money, mind you, but a very nice piece of change for logging into Adwords once a day. The worst thing about it is, we earned that money by following Google's instructions to the letter about tight, relevant advertising -- and now they've swept the rug from under us, and won't tell us why.

OK, there it is. Anyone experiencing anything similar? Comments? AWA?


10:16 pm on Aug 31, 2005 (gmt 0)

10+ Year Member

You know, based on what's been going on the last few weeks, I'd think some of the larger advertisers here might want to get together and talk class-action suit. I don't think Google can legitimately hide everything they do by saying "We can't tell you that."


10:22 pm on Aug 31, 2005 (gmt 0)

10+ Year Member

About the Tipping Point price -- well, it's just one of who-knows-how-many elements in an algorithm that tips the scales in our favor. Previously, there were all of two factors involved -- your Max CPC bid and CTR.

That's the real story that the tech press, let alone the mainstream press, isn't picking up on -- that the "other relevancy factors" that Google's been trying so hard to quietly gloss over represent a major change in its relationship with its customers. In essence, they've eliminated any transparency or accountability to us that the previous system of (MaxCPC x CTR = AdRank) fostered, and simply closed the process off. Which, as with most processes that were once open to the public and are now hidden from the public, opens the door wide open to corruption.

This also seems like the right time to point out the absurd catch-22 of the new system, illustrated here by my hypothetical conversation with Google:

Client: It's now a great Quality Score that Google wants to reward us for, right?
Google: Right!
Client: So how do we improve our Quality Score?
Google: Sorry, can't tell you.
Client: Pardon?
Google: Can't tell you.
Client: Isn't this whole thing about improving the Google user experience?
Google: Yes, absolutely!
Client: And you want to reward us for improving your users' experience, correct?
Google: You bet!
Client: But you won't tell us how?
Google. Sorry. Can't do it.

It'd almost be comical if there weren't billions of dollars at stake here, no?


10:53 pm on Aug 31, 2005 (gmt 0)

10+ Year Member

Well, this may be a bit off topic but I thought I'd share it.

I have a campaign with aproximatly 10% CTR and my ads are shown on position #1 or #2 at top of the page in blue UNLESS a specific bidder which is generalist appears on the same search kw from time to time.
In these cases that bidder goes to #1 spot, due to a high bid, but on the top right corner, he doesn't have a good CTR so he doesn't go to premium positions.
The problem is that none of the rest of us goes to that positions, we all remain below him, even though we get a higher CTR which in normal circumstances grants us a place in premium spot.


1:18 am on Sep 1, 2005 (gmt 0)

WebmasterWorld Senior Member adwordsadvisor is a WebmasterWorld Top Contributor of All Time 10+ Year Member

Well, I finally had time to settle in and read this thread. I have to say that I never got through even the first post till now. It was a little daunting to me, as someone who is posting in-between meetings, and so forth. ;)

slamthunderhide, I don't have an answer for you, but I will ask around with a few colleagues to see if I can gain any additional insight. I doubt that I will be able to add anything of note, since I can't see your account, and since you have already consulted with a team who can. But since you seem to be speaking primarily about top placement, I can think of one thing that would pull you down from the top spots in a hot second: editing your ad, even in the most minor way.

Any edit to an ad effectively creates a new ad that must be reviewed and approved before it go back up 'into the blue'.

All that said, I must admit that the sub-topic to this thread that really caught my eye was the one regarding Googlers advertising on AdWords.

.. Would love to see what AWA has to say, but I'm not optimistic that he or anyone else from Google will comment.

I'd be happy to comment, actually, and I speak as one who has made no secret of my own 3 year old account - having mentioned it on this Forum many times in the past.

By policy, AdWords employees may certainly have AdWords accounts. Please rest assured, however, that they are thoroughly monitored and governed by a list of requirements as long as your arm - designed to ensure no conflict of interest.

It is perhaps worth noting that everyone concerned with AdWords, whether an engineer working behind the scenes, or the person that answers your email, is actually encouraged to have a small AdWords account. The purpose of this is to make sure that everyone who works on AdWords knows exactly what it feels like to be an AdWords advertiser.

Yes, I've had my ads disapproved. Yes, I've had disabled keywords in the past, and even had my account slowed way back when. Yes, I've raised my budget to experiment, and then forgotten to lower it, and yes, I've paid more that I expected as a result. And on and on.

And, yes, all of these things irritated me. ;) The good thing about all of this, though, is that I really know how it feels to advertise with AdWords.

Bottom line: Many Googlers have AdWords account. IMO, It's a good thing, and it certainly is no secret. I can understand why this is concern to some of you, and I can also say with a great deal of confidence that you may rest easy.



1:44 am on Sep 1, 2005 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member

Wow! So you and I are playing poker but you get to see my cards. I am totally stunned. I had no idea.

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2:44 am on Sep 1, 2005 (gmt 0)

10+ Year Member

On a related note, Y!SM employees also speak about having their own accounts as well.


2:53 am on Sep 1, 2005 (gmt 0)

10+ Year Member

Shocked is right. Thanks AWA, but it's not necessary to "ask around" on my behalf, because you've provided the answer yourself. As for your reiteration of your company's repeated request to "rest assured" and "rest easy" since gee, none of us Googlers would ever use our proprietary knowledge to compete with our advertisers -- well, thanks but no thanks.

That very existence of a Googler-owned Adwords account is an irreconcilable conflict of interest, and you know very well why that is. But since you're pretending not to, I'll play along and spell it out. It's the same reason state employees can never win the lottery, it's illegal to buy stocks on an insider tip, and Goodwill employees get fired for buying that 25-cent T-shirt before it goes out on the rack for the other shoppers. It's because your insider status gives you an obviously unfair advantage at the expense of the public.

You say that's not the case -- that anyone who gets a Google paycheck is either incapable of or unwilling to use their knowledge to hurt customers like myself and the other members on this board. Care to share what you're selling with your Adwords account then, AWA? How about your coworkers' accounts? After all, you claim that you and your coworkers aren't competing with any of us, and if that's the case, you're certain to put your cards on the table and prove it, right?

Of course, that's absurd. If you're bidding on keywords that anyone, anywhere in the world, is also bidding on, then you're driving up prices and muscling for AdRank and you're using your inside knowledge of the ranking system to do it. You can claim that's not a secret if you want, but I'll promise you with that same "great deal of confidence" that 99% of Google advertisers have no idea that Adwords employees are allowed -- and encouraged! -- to exploit their knowledge of the system for their own financial gain, at the expense of those of us who keep your stock prices flying high.

Thanks for the suggestion about the editing of an ad, but as I said before, the ad hadn't been touched in months. The answer, you've convinced me, is that a fallen Google angel went bad and manipulated a perfect AdRank for himself.


3:00 am on Sep 1, 2005 (gmt 0)

10+ Year Member

I should say for the record that my previous post doesn't apply to "sample" accounts that employees of Google or Y!SM hold simply so they can navigate around the features of the account and understand the concerns that advertisers have. I'm referring to Google employees who run their own accounts for profit.


3:26 am on Sep 1, 2005 (gmt 0)

10+ Year Member

This is certainly news to me.

But then who is to know when a "Googler" decides to use his mother's friend's account for his aff biz?

So it is not whether or not G's employees can own an Adwords account or not. The question is can G nap those people who take advantage of this insider knowledge for their own benefits?

The answer, I think, is they can't.


3:37 am on Sep 1, 2005 (gmt 0)

10+ Year Member


I agree with you, and I never really expected this thread to go the way it did. My first reference to a rogue Google employee perhaps using inside info to trump our Adrank in my first example was just that -- a reference to a "rogue". I never thought we'd soon hear that the practice is sanctioned by Google and then see the practice vigorously defended by an employee here.

In all businesses, there are all kinds of insider things that aren't allowed, but happen anyway. Like you said, Aunt Edna comes in and uses your employee discount. You have Aunt Edna buy your lottery tickets. Aunt Edna sets you up an Adwords account in her name, etc.

The difference is, at most places, if you get caught abusing your power at the expense of customers, you're fired. At Google, apparently, you get a pat on the back.


4:41 am on Sep 1, 2005 (gmt 0)

10+ Year Member

slamthunderhide, depending on what the "list of requirements as long as your arm" means, it may not a pat on the back as you imagined.

A legal robbery?


5:31 am on Sep 1, 2005 (gmt 0)

10+ Year Member

Absolutely amazing. I surmised that something like this probably happens routinely. I also had an argument with my friends that while it did, Google would probably bring down the hammer on those they caught doing it.

It seems instead they give out the hammer so it can be used on their customers.

Whether a Google employee is advertising widget A or widget B- they are competing with someone and at an unfair advantage.


5:38 am on Sep 1, 2005 (gmt 0)

10+ Year Member

The question that Google is probably asking advertisers : "What can you do about it?"


7:24 am on Sep 1, 2005 (gmt 0)

>I can also say with a great deal of confidence that you may rest easy.

Well you would say that, wouldn't you?

I stunned, totally stunned - that you thought it appropriate to mention the corruption.

On my planet, when we are caught with our sticky fingers in cookie jars, we have things called 'lawyers' who we pay to remind us to keep our mouths shut.


11:47 am on Sep 1, 2005 (gmt 0)

10+ Year Member

This is unbelievable. I always assumed that employees at Google and the affiliate networks wouldn't be allowed to have accounts, because of the conflict of interest. I even wondered if it caused higher turnover when "Googlers" figured out that they could make more money at Adwords than by going to work. I don't think I could put it more eloquently than slamthunderhide, but evidently I needn't have worried.
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