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Old 08-08-2007   #1
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Google to change adwords ranking algorithm

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?
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Old 08-08-2007   #2
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Re: Google to change adwords ranking algorithm

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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/...placement.html

AWR
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Old 08-09-2007   #3
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Re: Google to change adwords ranking algorithm

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.

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Old 08-09-2007   #4
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Re: Google to change adwords ranking algorithm

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.
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Old 08-09-2007   #5
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Re: Google to change adwords ranking algorithm

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.
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Old 08-09-2007   #6
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Re: Google to change adwords ranking algorithm

Kevin wrote about their press release and spoke with Nick Fox for his article.

I had to follow up with a little interpretative piece.... let me know what you think... am I being too hard on Google? Could they revoke my Google Dance invite!!!
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Old 08-09-2007   #7
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Re: Google to change adwords ranking algorithm

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.
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Old 08-09-2007   #8
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Re: Google to change adwords ranking algorithm

There could a bunch of us standing outside....
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Old 08-09-2007   #9
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The science of being happy.

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....

Last edited by abbottsys : 08-09-2007 at 05:57 PM. Reason: typo
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Old 08-10-2007   #10
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Re: Google to change adwords ranking algorithm

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.
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Old 08-10-2007   #11
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Thumbs down Re: Google to change adwords ranking algorithm

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.
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Old 08-10-2007   #12
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Re: Google to change adwords ranking algorithm

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
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Old 08-10-2007   #13
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Re: Google to change adwords ranking algorithm

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.
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Old 08-10-2007   #14
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Re: Google to change adwords ranking algorithm

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Originally Posted by Mel66 View Post
...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
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Old 08-10-2007   #15
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Re: Google to change adwords ranking algorithm

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Originally Posted by rustybrick View Post
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.
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Old 08-10-2007   #16
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Re: Google to change adwords ranking algorithm

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...
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Old 08-10-2007   #17
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Re: Google to change adwords ranking algorithm

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....
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Old 08-10-2007   #18
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Re: Google to change adwords ranking algorithm

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Originally Posted by AussieWebmaster View Post
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..
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Old 08-10-2007   #19
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Re: Google to change adwords ranking algorithm

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.
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Old 08-10-2007   #20
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Re: Google to change adwords ranking algorithm

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