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AdRank, Affiliate Marketers and Max CPC

Scary questions that need answers!

   
5:46 am on Aug 31, 2005 (gmt 0)

5+ 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?

10:36 pm on Sep 1, 2005 (gmt 0)

10+ Year Member



Maybe I'm just naive but I find it hard to believe that an AdWords employee can view other customer's accounts without their passwords.

I wonder how many customers the average Adwords rep talks to in a day, and how many customers' accounts he or she looks at, and how many passwords he or she could collect . . .

However, exploiting classified knowledge is the American Way!

Say what?
11:07 pm on Sep 1, 2005 (gmt 0)

10+ Year Member



While I do find it surprising that they would encourage employees to create for profit accounts for the purposes of training/learning about how their system works, whether there is a policy to allow or not allow creation of accounts, there is very little that Google could do in practical terms to detect and prevent employees intent on using their insider knowledge for profit by either creating an account or selling the info to others.
11:18 pm on Sep 1, 2005 (gmt 0)

10+ Year Member



I swear, I would have bet as in many industries, that PPC employees had to sign some kind of contract that left them legally liable for any misuse of company knowledge.

Folks here are always going to be wondering now.....

Since this is probably going to be the most read thread for a bit, let me get this one liner in.
Try to throw a Red Cross link for Southern US relief on your sites

12:03 am on Sep 2, 2005 (gmt 0)

10+ Year Member



I swear, I would have bet as in many industries, that PPC employees had to sign some kind of contract that left them legally liable for any misuse of company knowledge.

Maybe this is a good question to ask AWA directly. But on the other hand, Google would have to find out that they did something wrong, and it's pretty easy to hide (even assuming they're actively looking).
12:09 am on Sep 2, 2005 (gmt 0)

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



Hello all,

As I read this thread, I see that clearly I have not done my best job ever at expressing myself - and I'd like to give this another shot.

Since I often think best in bullet points, here are some important points I'd like to clarify and/or expand on:

* In order to understand the AdWords system from the advertiser's perspective, sometimes AdWords employees are AdWords advertisers. I do believe it is really important for folks who are designing and supporting a system to be users of that system, and this serves to substantially improve the product.

* Not every AdWords employee is an advertiser, however, by a long shot. Contrary to the impression that I seem to have given, it is not policy that employees must have an account. Policy merely allows for it, for employees who wish to know the product inside and out.

* What I didn't make clear (and in retrospect, I certainly wish I had) is that the vast majority of such accounts are very small - and amount to test accounts, or 'sample' accounts as slamthunderhide called them.

* A literal handful of employees advertise 'for profit', and these accounts are subject to an exceptional level of approval and scrutiny. Employees in this category tend to be people who were AdWords advertisers before they were AdWords employees - and they continue to advertise under strict guidelines and oversight. Evidently bttmfeed met one such advertiser at a merchant meeting.

* No employee advertising on AdWords, regardless of level, is able to 'beat the system' in some way. They advertise on the very same system, and are subject to the very same guidelines and policies.

* I do regret the level of upset that my comments have caused, and I've painfully learned something about the danger of posting on the fly towards the end of a long day.

To close, I am aware that simply saying that we are an ethical company will not convince everyone. Frankly, I know it won't. But as someone who has spent on average 12 hours a day at AdWords for more than three years, I am deeply familiar with what goes on here - and I know that we operate with ethics as a touchstone. And, while I know that many will remain unconvinced, I do stand behind that.

Lastly, I have fully understood the points which have been made in this thread, and as always, I'll make certain that your feedback will be heard by the right teams.

AWA

1:03 am on Sep 2, 2005 (gmt 0)

5+ Year Member



AWA, you're burning more bridges than you're building. Show some respect for your audience and dispense with the "Aw shucks, I just said it wrong" and the smokescreening. No one interpreted you to mean that all Adwords employees hold, or are required to hold, Adwords accounts. It's also got nothing to do with how tired you were when you posted (and despite the angry responses, including mine, I'm certainly glad you posted what you did).

We also know that the 70 hours you've spent every week with the Adwords product for three years is more than sufficient for you to understand the system; Magic Advertiser Empathy Crystals don't form in your brains as a result of your willful decision to drive up customer costs and punish their AdRank by competing directly with them. You do, however, siphon profits away from customers and into your employees' pockets, as well as pad Google's profits by driving up click prices.

Most in need of address is the absolute whopper that "no employee advertising on Adwords is able to 'beat the system'." No one's saying there's some sort of Adwords cheat code that you can enter, a la Grand Theft Auto, to lock the no. 1 position at all times. It's simple: those who built a system are the ones who can manipulate its details to their advantage. Your alarm company can disable your home alarm. Bank employees make the best bank robbers. Crooked cops are the toughest criminals to catch, because they know the system. And Adwords employees who know exactly how the Adrank algorithm works can use what they know to steal Adrank and additional click revenue from their customers. No amount of shoulder-shrugging on your part will ever change that.

It doesn't matter whether 5 or 500 Adwords employees have for-profit accounts, or who scrutinizes them so exceptionally. It's Google's policy that's at issue here; how many employees are choosing to exploit it, while also important, is secondary.

1:09 am on Sep 2, 2005 (gmt 0)

5+ Year Member



Regarding whether it's easy to catch Googlers opening shadow accounts or selling algorithm info: of course it's not. It's extremely difficult. And it's those difficult-to-detect offenses that, in most circumstances, give rise to strict guidelines and harsh punishments for those who commit them.

In keeping with an earlier example, insider trading is notoriously difficult to track. But it's not impossible (ask Martha Stewart), and when you do get caught, they often make an example of you with severe punishment (ask Martha...wait, I already said that).

In sum...just because it's easy to get away with doesn't mean you just shrug and accept it. Those are the times where policies and punishments are needed the most.

1:47 am on Sep 2, 2005 (gmt 0)

10+ Year Member



I donīt think there are many who know the AdWords-Algo far better than we.

We do? Because I'm quite sure since the latest update I have no clue what is going on with my ads and their CPC. In fact, there is so much mystery around the latest changes that they only benefit those who know the system.

I would love to see google introduce a view bids tool, a rating system for ads (i.e. your current ad scores 4.9, here's why and how to change it) just so there is some transparency within the system itself not to mention competing with those within google.

2:04 am on Sep 2, 2005 (gmt 0)

10+ Year Member



You make a great example of Martha Stewart. What she did was essentially like stealing candy compared to what some corporate execs do.

She was very useful in making the public think that people who do this kind of thing are always caught.

Did you know that prior to September 11th there were massive put options (betting against a stock) placed against American and United airlines? They were some of the largest puts ever placed and on 9/11 they made massive amounts of money for those holding them. Other options were placed against companies residing in the twin towers. Most of the options were traced back to companies with CIA insiders including "Buzzy" Krongard former executive director of the CIA. (just one story: [prisonplanet.com...] )

Am I comparing something on that scale to Google? No, that would be foolish and insensitive. My point is that even in life or death situations where people could act to save life, they many times choose to use their insider knowledge to make a profit instead.

How much more then, in such a more trivial environment like Google can people exploit the system?

Of course, it's not trivial for those advertisers like myself making their living via this system.

2:04 am on Sep 2, 2005 (gmt 0)

10+ Year Member



My question seems answered in earlier posts.
2:54 am on Sep 2, 2005 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member



What I'm waiting for is the Google admission that they manipulate the search engine results to sell Adwords. Nah, the conspiracy theorists have to be wrong. They are wrong aren't they?
3:18 am on Sep 2, 2005 (gmt 0)

10+ Year Member



Its not a conapiracy theory - its a conspiracy fact.

:(

2:02 pm on Sep 2, 2005 (gmt 0)

5+ Year Member



Okay, so it appears that pretty much everyone, with the exception of myself and a couple of others on here, think this is a complete breach of ethics and conflict of interest on Google's part. I can understand your outrage to a degree I suppose, but let me pose this question to you...

Will you stop advertising on AdWords because of this?

I am willing to believe in, and side with, AWA in this matter simply because:

A. I believe a company who owns a piece of internet real estate, regardless of how big or small that company is, can do with it whatever they like within the boundaries of their contracts with the advertisers and...

B. Unless it's a technical problem, I don't want to devote my energy and time getting to the bottom of it. (Granted I guess I am doing that by posting here)

Has Google ever told us about their policy regarding employees owning accounts? Seriously I don't know, this is a legitimate question. I'd be interested to know this if anyone has something on it. Maybe we've just assumed but never asked. Quite frankly I've never considered the issue.

And just some clarifications and synopsis on quotes:

However, exploiting classified knowledge is the American Way!

This was a joke, but I'm kidding on the square. IMHO captitalism is all about using whatever is at your disposal within legal limits for personal gain, ethical or otherwise. I don't believe this issue really breaks much of an ethics barrier. We're just so paranoid of "Don't Be Evil" that we always assume that 100% of Googlers are indeed that.

To close, I am aware that simply saying that we are an ethical company will not convince everyone.

I don't believe that it is your responsibility to live up to everyone's diverse expectations of what is "ethical", just legal. I applaud your efforts though if Google does indeed take a stab at being so though...

It's Google's policy that's at issue here; how many employees are choosing to exploit it, while also important, is secondary.

I kinda think it's the other way around. The policy shouldn't be on trial, just those employees who decide to use the information to actively target other advertisers to do them harm (i.e.-not just having an account)

Of course, it's not trivial for those advertisers like myself making their living via this system.

This issue has been beat to death, but I'm of the opinion that nobody should rely solely on AdWords to make a living. Too risky and unpredictable.

I suppose I'll probably make a few people upset with this post. If that's the case I'm sorry, remember this is all opinion and you can take it or leave it, reply, rant, rave, agree or argue. All I'm saying is that if you don't like it, invest in YSM or MSN when it somes out. Or go after Google if you want, but good luck with that. I'll be optimizing my bids if you need me...

3:42 pm on Sep 2, 2005 (gmt 0)

5+ Year Member



Certainly this is one thing that makes it even more risky and unpredictable.

It would be good for Adwords if people could rely on it to make a living - certainly worked out well for Ebay when people figured they could do that...

4:25 pm on Sep 2, 2005 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member



Hi,

I think that it is completely reasonable for all G employees to have AS/AW a/cs, albeit with strict side conditions (such as NOT looking at and exploiting private data of other business partners, eg advertisers/publishers):

1) It keeps everything in the open.

2) It gives them experiences and helps find bugs quickly...

Just the first two that come to mind.

I encourage, indeed more-or-less insist on, all our staff, especially developers, having accounts with our own Internet payment system for similar reasons.

I just make sure that development staff DO NOT have access to production resources and data, so they are just like any other user, except they may get better customer support because Guido is just up the corridor! B^>

Telephone and retail-bank company employees have similar two-sided employer/customer relationships with their employers, and at least in the UK you can be prosecuted, never mind fired, for breach of trust and the Official Secrets Act and the Data Protection laws if you exploit your position unethically.

Rgds

Damon

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