Google & Gasoline

If there was any question what the result of Microsoft’s unsuccessful attempt to buy out Yahoo would be, we got the answer this past Thursday. That was when the Inside AdWords blog announced “improvements” to the Quality Score system.

Ostensibly, the major improvement is the introduction of real-time calculation of Quality Score. I don’t see how that really changes anything. Advertisers should be tweaking ad copy, adding negative keywords, managing bids, improving landing pages etc. regardless of the frequency of scoring. If you’re properly maintaining a campaign, this doesn’t affect you.

Tangent: Of course, having the proper tools for improving quality would be nice. I’m looking your way, Search Query Performance report. The theory behind it is great, a report showing all the search queries that triggered your ad. The problem is that it only shows you what works, the queries that resulted in clicks (so you can add them to your keyword list and spend more money). Even then, most of those get lumped into “487 other unique queries.” Thanks for narrowing that down. Anyway, they don’t tell you what queries didn’t get clicks, which would be really helpful in adding negative keywords.

Google super-awesome change #2 is where the real intent of their “improvements” starts to become more apparent. “Keywords no longer marked ‘inactive for search.’” Oops, someone clued Google in to the fact that no matter how bad an ad is, they can still charge for it if someone clicks on it. Plus, advertisers have to pay more when there’s more competition. Unfortunately, this is just common sense, so it was bound to happen eventually. Google really gets flagrant with the last one, though.

#3: “‘First page bid’ will replace ‘minimum bid.’” There are a couple goodies when you dig into the FAQs about this change. There IS still a minimum bid requirement, but Google just can’t tell you what it is because it’s calculated on the spot (i.e. real-time Quality Score). More importantly, Google claims that the first page bid is not “expected to make advertisers bid more or to raise prices.” Yeah, and the Chinese gymnasts were all 16 years old.

Raising prices is exactly what this change is meant to do. If an advertiser knows what it will cost to be on the first page, and can afford it, of course they’re going to increase their bids. Then their competitors have to increase bids to maintain position. Further, if you know the minimum, you can bid the minimum. If you don’t know the minimum, you have to bid enough to exceed the minimum.

Of course, if Google wants to raise prices, who’s going to stop them? Yahoo is now partnering with them. MSN is a distant third in volume. New search engines like Cuil have been introduced to a resounding thud. With no real competition, why wouldn’t Google improve their bottom line? Much like gas prices, the cost for advertising on AdWords will rise until it’s too expensive and advertisers find new outlets, or return to traditional media. Besides, I thought titling this blog “Do Not Pass Go, Do Not Collect $200” was a little too cliché.