Google to change adwords ranking algorithm

[abbottsys]

I just got notice that Google plans to change the promotion algorithm - whereby certain ads are "promoted" to the top slots above the organic listings. They plan to use maxCPC instead of actual CPC in the ranking calculations. Rollout is over the next few weeks. This should be interesting to watch. Has anyone seen any changes yet?

[AdWordsRep]

I just got notice that Google plans to change the promotion algorithm - whereby certain ads are "promoted" to the top slots above the organic listings. They plan to use maxCPC instead of actual CPC in the ranking calculations. Rollout is over the next few weeks. This should be interesting to watch. Has anyone seen any changes yet? A sharp eye you have there, abbottsys - as I have come to expect. ;)

More info on this subject may be found on the Inside AdWords blog:

Upcoming change to the top ad placement formula
http://adwords.blogspot.com/2007/08/upcoming-change-to-top-ad-placement.html

AWR

[Discovery]

So if I read and understand this correctly - Double your bids, dont worry too much about quality score and hope you never have to pay your full bid. This is pretty much the MSN method.

I've spent countless hours and many $$$ achieving great positions. News like this makes me very uneasy.

Discovery

[PPC]

This doesn't seem like a huge deal to me... just a way for Google to increase revenue. From what I can tell, this will happen in four possible ways:

1) Promoting ads that have high bids but are paying low CPCs (due to advertisers below them with lower quality, lower bids, no competition, etc.) from the right will increase CTR and spend for these advertisers.

2) Some advertisers who currently have top placement on the right could increae their max bids in an attempt to get promoted.

3) I am not sure if Google will do this but consider this example... an advertiser is bidding $1.00 but only paying $0.20/click for a specific keyword. The promotion threshold for this keyword is $0.50. The ad now will be promoted and the new CPC will be $0.50.

4) Some ads currently in the promotion area (possibly with effective CPCs near max bids) will be demoted to the right hand side and advertisers will need to increase max bids in order to regain promoted status.


Thats how I see this change affecting things. #1 and #2 above are almost certainties to happen. #3 I am not sure about as the announcement is vague. #4 is something that Google will probably be testing and if they find that it is more profitable for them to have the promotion algorithm behave like this for certain terms, then that is how it will probably work.

[SearchEnginePPC]

I'm a bit uneasy about this as well. As much as I like top positions, the minimum bid for the promotion area sounds a bit tricky.

It's one thing for top volume terms to have a top slot you can bid into, but what if you're already there and feeling the love?

And what about lower volume terms where you've gotten to a good CPC for the top right slot, but may now be pushed into the promotion area at a higher CPC. I mean, you've kept the higher CPC on those terms in case competitors come in trying to take the top slot, but that doesn't mean you really want to pay extra just to pay more to be in the promotion area if there aren't new competitors for your keywords.

[AussieWebmaster]

Kevin wrote about their press release and spoke with Nick Fox for his article (http://blog.searchenginewatch.com/blog/070809-123204).

I had to follow up with a little interpretative piece (http://blog.searchenginewatch.com/blog/070809-133302).... let me know what you think... am I being too hard on Google? Could they revoke my Google Dance invite!!!

[CarrieHill]

At the risk of also losing my Google Dance Invite (see you there Aussie) I'd like to add my 2-cents here.

I think this is simply a way for Google to get people to pay more for top positions but cloak it as delivering "higher quality results." I cant imagine why MaxCPC would be a factor otherwise. If you're 100% concerned with delivering the most relevant, best quality result in the top position - it should be human reviewed and not depend upon how much you're bidding at all. Of course that will never happen.

I can criticize, but I certainly dont have a solution. I sort of thought it was working fine the way it was.

[AussieWebmaster]

There could a bunch of us standing outside....

[abbottsys]

Consider the average frantic searcher. They crank a keyword into Google, get an SRP and click on the first thing they see - such as the top ad - only to realize they acted to fast, so they hit the back button and browse the SRP much more carefully - including looking at all the right side ads. Finally they find what they want and click on an ad way down the right side.

So, how do the players involved in this transaction feel...

The searcher pays nothing and ultimately gets what they want. Happiness.

Google makes money twice (searcher clicked twice). Happiness.

The advertiser with the top ad sees lots of clicks, a great CTR, but few conversions and a big spend - or, to put it another way, very high cost/conversion. Pain & Agony.

The advertiser with the right side ad sees less clicks, a modest CTR but good conversions with a low cost/conversion. Happiness.

So, everyone is happy, except.... :)

[rustybrick]

I also spoke with Nick Fox and he was obviously adamant about that the quality factor comes into play a lot more with the promotion of an ad from a normal sponsored listing to a top sponsored listing.

So it is not just about increasing your max CPC. It is also about increasing your "quality".

But that was Nick Fox, a Google rep. :)

[Toure]

Looks like Google have turned up the revenue dial to me.

The old actual CPC formula took into account the quality (within ad rank) of your direct competitors. So sure, if the guy behind you had a poor ad rank, in theory your actual CPC would of been lower and hence your ad rank would be lower to. But at the same time, you are all in the same bid landscape within this top quality threshold position, so this was not an issue.

Now with bid CPC, it will not take into account the quality around you to the same degree. It will be easier for all to get those top positions and with greater emphasis on bid, rather than quality.

[Mel66]

Nice piece, Aussie.

To me this flies in the face of the concept of Quality Score. The underlying message prior to this has always been "you can't buy your way to the top - you have to have a good ad, good keywords, and a good landing page." Now, the message seems to be "well, you need all that stuff, but if you offer to pay us more money, you'll have a better chance of your ad being seen as Quality." Not what Google intends, maybe, but that's what it sounds like.

My Google reps are visiting me on Monday, and this is on the agenda. I'll post more info after that.

Melissa

[ApogeeWebLLC]

What's interesting is that there will now be 2 minCPC values:

1) minCPC to be active for search
2) minCPC to be eligible for top placement

Only the first is visible in the AdWords interface. On the one hand, that's pretty lame. OTOH, if they did publish that 2nd minCPC, there'd be some pretty crazy bidding wars and they really would boost top line revenue.

I wonder if they'll provide this 2nd minCPC to select customers?

Also, I don't think this is as big a deal as it seems at first blush. Ads on the right side already use max CPC in the ad ranking formula. They're going to use that same formula for ad ranking at the top now, replacing actual CPC with max CPC. At the same time, they're introducing a new minCPC threshold for top placement. Does this mean a new QS?

There are already 2 QS values for search:
1) QS for minCPC that evaluates landing page
2) QS for ad ranking that ignores landing pages

Will there now be a new QS for top placement? It's getting to be a mess. The AdWords interface is not keeping up with the changes. That's the real problem - advertisers are losing control. What you see is not what you get.

[abbottsys]

...My Google reps are visiting me on Monday, and this is on the agenda. I'll post more info after that.
Sounds good. This whole ranking stuff is getting insanely complex. Google should just rotate all ads, so that ever ad spends equal time at every rank, including top. Advertisers all pay the same fixed CPC to partake in the rotation. We know exactly what we're paying, and google knows exactly what they're getting. LOL :)

[AussieWebmaster]

I also spoke with Nick Fox and he was obviously adamant about that the quality factor comes into play a lot more with the promotion of an ad from a normal sponsored listing to a top sponsored listing.

So it is not just about increasing your max CPC. It is also about increasing your "quality".

But that was Nick Fox, a Google rep. :)

This just gets funnier by the day.... "the quality factor comes into play a lot more" - I thought it was used fully now... so that means they are upping the percentage of its impact in the equation... so now we have to really take note of what is expected... but the arbitraged MFAs will do well as they have a lot of keyword density working on their pages.

[akintosyali]

I am not that worried yet... Assuming we are all good advertisers (we are in it to make profit -not just get traffic), people who raise their max bids to get top spots will see lower conversion and will have to lower their bids. I am never in a top spot for high search terms. you'll hardly ever have a good roi for top spot of a highly competitive term...

[AussieWebmaster]

We hold a lot of top spots and have always been in the blue box as it were.... while you do get more clicks with less conversion.... you are getting more conversions overall....

[akintosyali]

We hold a lot of top spots and have always been in the blue box as it were.... while you do get more clicks with less conversion.... you are getting more conversions overall....


Are you after number of net conversions or net profit? (I am not saying one is the better or worse methoud, it is whatever your marketing goal is..) You can have 1000 conversions at $1 each (but at what cost?)

I buy based on total net profit and the only words I am on top for are the long tail terms..

[PPC]

There are many terms (competitive and long tail) where we bid to the top position for the greatest profit and many terms (competitive and long tail) where the most profitable position is down the listings quite a bit. I think to say that either "you should always be in the top for competitive terms" or "you should never be at the top for compeitive terms" is a bigtime generalization and definitely not applicable for all advertisers.

[AussieWebmaster]

there are some words we have pulled back from the top and then they convert at a profitable rate

[CarrieHill]

I have found a slight correlation - (no study on this as yet but I'm working on it) between the COST of the item for sale and the position it converts best in. In what I've been seeing in AdWords, the higher dollar the ticket item is, the better it converts at a 4-7 position. I believe this is because shopping happens through the top positions, and by the time they get to 4-7 they've seen what the deals are, what the average price is, and they decide to buy. If an item is $2 or $3 it's not worth shopping - if it's $1,000 (like a vacation or other travel purchase) they'll shop it a lot harder.

That being said, I see this developing into a trickle down affect honestly. I dont see them changing the top result and leaving everything else alone.

[akintosyali]

It is good that we are all talking about the same thing. We are in this to make money - with positive ROI. So to me position is irrelevant. I bid wherever the KW brings the highest ROI...

I get really worried about people looking at only conversion rates or revenue and not the cost. I have had many KWs which had great conversion, but the revene per click did not justify the cost per click, so we pulled the plug on it.. It is really as simple as that for me.

[J Clark]

Isn't the bottom line here that it is now possible to bid into the #1 position? Regardless of relevancy, if I have a maximum bid of $20 I'm almost guaranteed that spot.

I loved using Google over Yahoo and MSN because, in my verticle, achieving the top spot is where I want to be and provides the best ROI. With a highly relevant landing page as well as ad copy I could achieve that with minimal bid.

To me Google is moving away from the whole idea that made them successful - rewarding those who are highly relevant.

I certainly hope I am wrong!!

[abbottsys]

Glad to see this thread is spurring great debate.

I get the best results when I'm halfway down the right side. The top (promoted) positions almost never work for me. I'm surprised folks think top is good. I've done detailed plots of maxCPC v. cost/conversion and these curves are brutal in showing the problems with top position. But, maybe it's just my industry. Maybe things will change with Google's new ranking/promotion algos. I'll certainly be watching closely. Strap on your seatbelts, this might be a bumpy ride...

[Shmuel]

Yeah, I'm kinda in the wait and see mode. I don't want to be in the top position, as my CPA is just too high that way (in most cases). But if my competitors are all bidding for the top, does that mean my ad in 3,4, or 5 is now going to be that much lower? That's really the only thing I'm concerned about. But it will be interesting to see what happens (especially when I spent the last couple of months optimizing my campaigns).

[akintosyali]

This is the first time I am hearing that position 1 converts the best...

[abbottsys]

This is the first time I am hearing that position 1 converts the best...
Read my post in this thread "The pain of being #1"

[AussieWebmaster]

The number one spot is a tricky spot... but it can thirow awesome rides with the rght ad and landing page
also holding high organic spots with them makes both better converters

[abbottsys]

The number one spot is a tricky spot... but it can thirow awesome rides with the rght ad and landing page
also holding high organic spots with them makes both better converters
Yes, agreed. I find that top is good in those situations where google promotes your ad on merit (i.e. without you changing your maxCPC), but if you try to chase after a top position by increasing maxCPC then you can run into big trouble with your cost/conversion.

The other thing about the top slots is that they can sometimes have major effects on the search network and the content network, since some of these partners might only feature a few ads and will grab the tops.

Anyway, it will be interesting to see what happens when the new ad promotion algorithm comes into effect. Any day now. Has anyone seen any changes yet?

[NewKidOnTheBlock]

The number one spot is a tricky spot... but it can thirow awesome rides with the rght ad and landing page
also holding high organic spots with them makes both better converters

If I understand this correctly you're not talking about the #1 in organic and #1 in paid search = high click through rates, but
top position (not exclusively #1s) can make the people who click through more likely to buy (better converters)?

Just curious if I understood you correctly as this would be new to me and I would have learned something new today.

[AussieWebmaster]

Number one in PPC in the blue area (sometime pink etc) is good for clicks - many people do not know it is an ad and they are eager to find what they are searching for.... obviously the conversion is lower - but if you write the right ad that filters some of the early clickers/non-buyers and have a solid landing page you can do well - the conversion percentage may not be as high as some lower spots but the sheer volume makes up for it.
20 sales with $6 profit is better than 10 with $10 profit

The number one in organic at the same time lifts both results click thru rates

[Ryan L]

This is killing me. I think that some of the institutional adwords reps must be pushing this to their clients rather stiffly. Sites that have little to no relevancy are bumping me off the top page. My main keyword has jumped nearly 50% in cost to get back on the front page.

How long can I expect till relevancy/quality/CTR bumps these guys off?


Is Google the loan shark of teh tubes?

[NewKidOnTheBlock]

Thx for the explanation!

The number one in organic at the same time lifts both results click thru rates


You say this as if it's (almost) always true? Have you always had this experience?

I've asked 2 SEOs (I consider to be great ones) about this and read a thread in a web analytics forum where somebody said he had done a study on this (a controversial discussion followed :-)).

And well there have been a lot of very different opinions (and I have yet to come to a conclusion who I should believe lol):

-it does work
-it does not work
-it does work in some industries, but not in others
-it does work if you do it right
-If you have an organic #1 a PPC listing can hurt you as sometimes it cannibalizes traffic (people will click on your ad who would have clicked on your organic #1 spot anyways, but they also clicked on your ad)

Have you (almost) always had the experience that it does lift
CTRs? (really just curious)

I was going to say maybe it always works for you, because you're doing SEO/PPC in the financial industry (mostly if I understood this correctly in another thread) - but then again that would make people more likely to research what they're going to buy (and thus click on various search results/PPC results) which would probably only mean that it's harder to get a higher CTR in such an industry than it is in the average industry...so that's probably not the reason, I assume.

Maybe in your case it's "it works if you do it right"? ;)

[Shmuel]

In my experience, having an above the fold organic listing and a top paid ad only helps the conversion. The theory that I'm working off of (as told to me by my marketing director) is simple: The customer sees that you rank well, meaning that you are relevant. They also see that you can afford to advertise at the top, meaning you're more than likely going to be here tomorrow.

In addition to this, the more real estate you take up on the SERP, the more likely you will get the conversion. Do you want the customer to click your ad instead of your organic listing? Of course not! But wouldn't you rather they click on your ad instead of your competitor's?

[Gooner151078]

HI,

Sorry to revert back to the algorithm change but I have noticed another small amend to that has manifested itself recently.

Imagine a conducts 3 consecutive searches in Google: (not a real life example)

1st Search: "Red Peppers" - red pepper related ppc ads are shown.
2nd Seacrh: "Green Peppers" - green pepper related ppc ads are shown.
3rd Search: "Red Peppers" - green pepper related ads are shown.

ie. Google remembers the last search carried out and shows these ads.

If the user searches again on "Red peppers" ads related to red peppers will again show.

According to Google UK this is a change to reflect what the user has previously typed in. However, it does not make much sense to me and there are plenty of industries that will be affected by this.

Essentially Google is choosing to show incorrect ads against your the keyword. This begs some interesting questions.

- How does this affect the CTR for the green peppers ad. If the user has searched "red peppers" for the second time but been shown a green peppers ad, is that a registered impression for the "Green Peppers" ad?

- If a user clicks and makes a sale on the "green peppers" ad yet has searched on "red peppers" does the "green peppers" ad record a completed action in Google Analytics. IE. Could "green peppers" be the best performing keyword for sales of red peppers?

<rant> Has anyone else noticed this? Does anyone else believe that Google are changing too much, too quickly without considering the impact on users and loyal advertisers?

I would understand if they were taking actions to outwit cunning advertisers and be true to the user but recent actions are detrimental to user experience and to customers? </rant>

and I haven't even started on "yellow peppers":)

[Toure]

This 'personalisation' has been happening for a while Gooner.

http://sphinn.com/story/953

From Google -

"What you're seeing is that we look at the user's previous query and see how well it intersects with the current query. If it's significant, we'll use it to help targeting on the current query. We simply look at what's in the referring URL (every time you load a web page, the HTTP header includes your previous URL as the "referrer").

[Gooner151078]

Thanks Toure,

It is the first time I have spotted it. In the example, it looks really useful but it is affecting some of my clients.

Of course this is dependendent on all of your searches being related to one another.

Personally I would have thought that a user wanting to book a holiday to spain and know what the weather is like at the time would search:

1. holiday to spain
2. weather forecast in spain.

With this system Google is assuming that if your second search was:

2. "weather forecast"

then you want weather forecast for spain, whereas I would argue that these should be treated as unrelated searches.

So your advert may not necessarily show for the keyword you are bidding on?

[abbottsys]

Has anyone seen the new ranking algorithm in operation? I've not detected any changes yet, but I assume rollout is imminent.

[Ryan L]

All I have seen is higher costs to stay at the top for main keywords and some irrelevant results. I think that the "alert" caused some software and PPC marketers to inflate their bids...pushing me out of the top spots on the right (not in the blue).

In some cases I was knocked from the 3/4 position to the 2nd page...increasing my bid by 50-75% has me back where I need to be.

Turns out adwords is a bit price inelastic...haha better get my money in the Big G soon....its like the Exxon Mobil of the information age.

[abbottsys]

Just received an email from Google saying the new algorithm is live. (Wed, 5:55pm US East Coast Time.)

[AdWordsRep]

Just received an email from Google saying the new algorithm is live....

Yes - also posted about in some detail on the Inside AdWords blog earlier today:

http://adwords.blogspot.com/2007/08/improved-top-ad-placement-formula-now.html

AWR

[sem4u]

Did anyone else receive an email about this coming into effect? I know that I haven't received any. There are no messages in the accounts either.

[Discovery]

I believe it went live within the past 24 hours.
I don’t believe you will get an explicate message stating it is live.

We have seen some significant changes to a few major campaigns.
I don’t mind dealing with some shifting around and competing with who I know are formidable competitors. That’s the fun part of the game. However, what we have seen is that not only have our ads been replaced, but our main competition's ads as well, with perfectly horrible ads like this:

http://www.dontmakeacostlymistake.com/?gclid=CMbXrrzqi44CFSc8YQodV3pp1g

From what I have seen it looks as though G is rewarding content heavy landing pages. Pretty funny for a company who has achieved a great deal of success on the minimalist design.


Discovery

[adamap]

I never thought it was a good idea to have a max cpc way over what you'd want your actual cpc to be. Before daily campaign limits, that was a great way to blow a lot of cash.

[AussieWebmaster]

Okay we are a month into this... no doubt the reason the thread has stopped is we are all dealing with the sudden jumps in our costs.

We have seen a jump of well over 30% in cost in the past 2 weeks in particular. Guess the people who lead with the bids are costing all of us to pay more. Even if we are getting the one spot the gap between max bid and actual bid has decreased dramatically.

If you try and lwoer your bid you lose the spot.

Guess it is time to allow these competitors to spend their funds with higher bid and higher position -> which will give them much more traffic and thus a huge increase in spend. Knowing that alot of that will not convert it is the hope that their lack of solid analytics and time-tested conversion pages will push them eventually back down.

If not the cost of doing business has just gotten a whole lot more expensive.... and Google so obviously is making so much more for their CPCs.

[Shmuel]

To be honest, our spend has not increased that much. In fact, slow business month aside, our numbers have remained pretty stable.

[Ryan L]

Ive harped on this in a couple of different threads, adwords spend is up about 25% I wish I had the money to buy the stock cause I would assume that it would correlate fairly highly to increased earnings>>>growth>>>market price.

What is dissapointing to me is that I have seen a decent amount of irrelevancy in my vertical. It amazes me that sites with literally million dollar campaigns can't get something as simple as broad vs. exact match figured out.

One particular phrase I have dropped completely because the cost jumped from 1-2 dollars to $5 just to re-activate....bah!

Google is flexing their muscles, it is a relatively inelastic product, they have the eyeballs. Sure Yahoo may have better mechanisms and MSN is implementing new features quickly, has good customer service and supposed higher conversion ratio; it all amounts to squat.

Google is the king and the king wants more tithings.

[AussieWebmaster]

Yeah we have them floating around $20-30 a click.... so bid busting hopefully is an option