All adds have a clickrate of 1%
Searchterm [widgets]
Affiliate 1 is bidding $10, domain: widgets.com (displayed)
Non Affiliate1 is bidding $9.50, domain: my-own-widget.com (displayed)
Affiliate 2 is bidding $9, domain: widgets.com (not displayed)
Non Affiliate2 is bidding $0,05, domain: otherwidget.com (displayed)
Whats the PPC Price for Non Affiliate1?
$0.06 or $9.01?
Whats the PPC Price for Non Affiliate1?
Hactic, in your scenario, the ads will be shown in this order, and each advertiser will pay this much:
Position 1: Affiliate 1, who pays $0.07
Position 2: Non Affiliate1, who pays $0.06
Position 3: Non Affiliate2, who pays $0.05
BTW, it is really the same formula as always, except that if there is more than one ad with the same Display URL, then an 'auction' is run amongst all ads with that Display URL, and only the one with the highest rank number will appear. So, you are correct that Affiliate 2 would not show.
AWA
Hactic, in your scenario, the ads will be shown in this order, and each advertiser will pay this much:Position 1: Affiliate 1, who pays $0.07
Position 2: Non Affiliate1, who pays $0.06
Position 3: Non Affiliate2, who pays $0.05
AWA, I have to say You're wrong this time. You might need another cup of coffee.
The correct answer should be:
Position 1: Affiliate 1, who pays $9.51
Position 2: Non Affiliate1, who pays $0.06
Position 3: Non Affiliate2, who pays $0.05
AWA, I have to say You're wrong this time. You might need another cup of coffee.The correct answer should be:
Position 1: Affiliate 1, who pays $9.51
Position 2: Non Affiliate1, who pays $0.06
Position 3: Non Affiliate2, who pays $0.05
FromRocky, You're right, unless the actual CPC is (re)calculated after the de-duplication has occurred.
AWA, I have to say You're wrong this time. You might need another cup of coffee.
FromRocky, and PeteM - you are correct, although I think this is not a case of too-little-coffee, so much as trying to do too many things at once. And perhaps, the consequent too much coffee.
In any case, your pricing is correct, of course, and just how it would have been pre-policy-change.
So, my apology.
I was really trying to make the point that, now, when there are multiple advertisers with the same Display URL, that a 'preliminary' auction is done to determine which of those advertisers has the highest rank number - and then that advertiser moves on to the 'normal' auction with the other eligible advertisers.
AWA
Sorry to appear pedantic but we need to be really clear about this!
So, which is it:-
Method 1
========
1) Calculate Adrank (based on max cpc and ctr).
2) De-duplicate identical url's.
3) Calculate actual CPC based on de-duplicated list.
Non Affiliate1 pays $0.06
Method 2
========
1) Calculate Adrank (based on max cpc and ctr).
2) Calculate actual CPC.
2) De-duplicate identical url's.
Non Affiliate1 pays $9.01
If the answer is Method 2 then as an advertiser I'm gonna be pretty annoyed at having my CPC calculated against a "ghost" ad.
Thanks, Pete
[edited by: PeteM at 8:53 pm (utc) on Jan. 10, 2005]
AWA,
Sorry to appear pedantic but we need to be really clear about this!So, which is it:-
Method 1
========1) Calculate Adrank (based on max cpc and ctr).
2) De-duplicate identical url's.
3) Calculate actual CPC based on de-duplicated list.Position 1: Affiliate 1, who pays $0.07
Actually no. With Method 1, which I guess is going to be the actual Method, Affiliate 1 pays $9.51.
Max CPCs
========
Affiliate 1 - $10
Non Affiliate 1 - $9.5
Affiliate 2 - $9
Non Affiliate 2 - $0.05
After deduplication
====================
Affiliate 1 - $10
Non Affiliate 1 - $9.5
Non Affiliate 2 - $0.05
Final CPCs
==========
Affiliate 1 - $9.51
Non Affiliate 1 - $0.06
Non Affiliate 2 - $0.05
Method 1 is the right one and it's the only one.
Please note that the actual CPC is based on the Max. CPC x CTR of the ad one below. In this case, the actual CPC of Affiliate 1 is based on the Max. CPC and CTR of the non-Affiliate1. Thus, there is no "ghost ad" here. The "ghost ad" (affiliate 2) has been neglected as AWA indicated. To change the actual CPC of the Affiliate 1, either one of these parameters (Max CPC or CTR from the non-affiliate1) has been changed. In your example, none of these parameters is mentioned to be changed. Thus, the actual CPC of the first ad should be $9.51, constant.
<<edited due a correction on the original post>>
[edited by: FromRocky at 9:08 pm (utc) on Jan. 10, 2005]
The question is.
1. Is there a 'pre aution' to determine who gets to bid.
And then those bidders go through the Ad Rank formula to see how much they pay while the other bids no longer matter(scenario 4 posted by AWA).
OR
2. A pre auction to determine who gets to bid. The AdRank formula including the pre auction winner, but then when price is calculated, all bidders prices are actually used. (scenario msg 5 by FromRocky)
1. Is there a 'pre aution' to determine who gets to bid.
And then those bidders go through the Ad Rank formula to see how much they pay while the other bids no longer matter(scenario 4 posted by AWA).
eWhisper,
AWA and I both basically talked the same thing, agreed with (1) as you stated above. The difference is that AWA mis-stated a number. He meant 9.51 instead of 0.07 because of "too much coffee". That's all.
OK. We're all confusing. Let me try another one.
The following quote is from AWA in post #7.
when there are multiple advertisers with the same Display URL, that a 'preliminary' auction is done to determine which of those advertisers has the highest rank number - and then that advertiser moves on to the 'normal' auction with the other eligible advertisers.
AWA should say "the same affiliate" instead of "the same Display URL" in the above quote based on the words from the e-mail as you and I received. I correct AWA again. Yes, AWA must have "too much coffee".
From this quote, I see that there is an additional step as AWA called it "'preliminary' auction" due to the result of TOS change. In this step, all ads with the same affiliates will be ranked based on their ad rank numbers (Max. CPC x CTR). The ad with the highest AdRank number will be selected in each affiliate group to be a representive ad for its group.
Example:
Step 1:
Advertiser1(Affiliate A) Adrank=10 Position 1
Advertiser2(Non-affiliate) AdRank=9 Position 2
Advertiser3(Affiliate B) Adrank=8 Position 3
Advertiser4(Affiliate A) Adrank=7 Position 4
Advertiser5(Non-affiliate) AdRank=6 Position 5
Advertiser6(Affiliate C) Adrank=5 Position 6
Advertiser7(Affiliate C) Adrank=4 Position 7
Advertiser8(Non-affiliate) AdRank=3 Position 8
Advertiser9(Affiliate B) Adrank=2 Position 9
These positions are based on the current system ranking.
Selected representative ads will be:
Advertiser1 for Affiliate A
Advertiser3 for Affiliate B
Advertiser6 for Affiliate C
These representative ads will be added to the non-affiliate ads to create a new pool of ads. The new pools for the above example will be:
Step 2:
Advertiser1(Affiliate A) Adrank=10 Position 1
Advertiser2(Non-affiliate) AdRank=9 Position 2
Advertiser3(Affiliate B) Adrank=8 Position 3
Advertiser5(Non-affiliate) AdRank=6 Position 4
Advertiser6(Affiliate C) Adrank=5 Position 5
Advertiser8(Non-affiliate) AdRank=3 Position 6
The above position will be designed for the next AdWords ranking.
Note that the Ad Ranking Number for all of the above ads doesn't change during the all processes since their Max CPC and CTR for each ad remaining the same. However, The ad position will be changed after pre-auction.
What AWA preferred the "normal auction" is a step to re-arrange the ad pool without the eliminated ads as Step 2.
Now, the actual CPC will be calculated based on the new ad pool.
Actual CPC for the position 1 will be based on the Adrank number of position-2 ad. From the above example,
Actual CPC (Ad-1)=(9+0.01)/CTR of Ad-1
Hope I have shown my thoughts clearly.
[edited by: FromRocky at 3:24 am (utc) on Jan. 11, 2005]
Great math.
Can't wait to see AWA read it like 10 times before responding to it :)
If AWA will please confirm the above is correct, it'll make a lot of people happy...
Can't wait to see AWA read it like 10 times before responding to it :)
Heheh. You got that right, eWhisper!
If AWA will please confirm the above is correct, it'll make a lot of people happy...
I was actually on my second reading when I decided that, given my track record in this thread so far today, I'd like to read it another two times, then run it past one of my 'panel of experts' for confirmation. ;)
I'll do that tomorrow, as early as I can, and post again.
AWA
I'm really trying to boil down the many questions and examples in this thread to the essential question, and it seems to me to be the one below. If I mistaken, I'll rely on someone to let me know what the essential question is, and I'll get back to it. ;) I'll also comment on the example posted by FromRocky.
So, my take on the essential question:
After the new policy takes affect, will the affiliates/merchants who are not showing affect the /position/pricing for advertisers who are showing?
The bottom line answer to this questions is 'No'. The auction for position/pricing is run only among those who are appearing.
The way it will work, in as few words as possible:
1) User types in a query
2) An auction is run among all affiliates/merchants using the same URL, and one is chosen to show, based on Ad Rank.(The above two steps are referred to in the email - quoting: "For instance, if a user searches for books on Google.com or anywhere on the Google search and content networks, Google will take an inventory of ads running for the keyword books. If we find that two or more ads compete under the same URL, we'll display the ad with the highest Ad Rank.")
3) The 'winner' of the above auction is then sent to the normal auction, which takes place in exactly the same way it always has, and which does not include any of the affiliates/merchants who are not appearing.
I hope I've spoken to the essential question, and am sure I'll be set straight, if not. :)
AWA
If there are two affiliates who want to be at the top, they will be having an artificial bidding war against each other.
Assume a keyword has three advertisers - 2 affiliates and 1 non-affiliate who is only prepared to pay $0.05 per click. Then you'll have this situation:
Affiliate #1 Max Bid $56 (both in an ongoing bidding war...)
Affiliate #2 Max Bid $55
Non affiliate #3 Max Bid $0.05
Leading to this pricing arrangement:
Affiliate #1 Max Bid $56, CPC $0.06
Non affiliate #3 Max Bid $0.05, CPC $0.05.
Now isn't that a bit daft, or have I misunderstood this double auction concept?
