Google’s AdWords paid search program has always been designed to be different from Yahoo!’s competitive program—AdWords is less work to operate but Yahoo! is much easier to plan and predict. Google is now introducing changes to AdWords that may make it even simpler to run paid campaigns, while making the planning even harder yet. Find out what they are up to.
In our book, Search Engine Marketing, Inc., Bill Hunt and I painstakingly explain how to plan your paid search campaigns, so that you can predict both the cost and the return on investment. At least we do that for Yahoo! paid search—it is actually quite difficult to do with Google. Google’s method of ranking their paid search results, which has recently been christened AdRank (to evoke comparisons with their PageRank organic search ranking algorithm), is far more complex than Yahoo!’s.
Yahoo! shows the ad that has the highest per-click bid first. Simple, huh? And because it is so simple, it is relatively easy to predict the outcome of your campaign. Although you can’t know for sure that bidding a few cents over the current #1 bidder will result in you getting the #1 spot (because the incumbent leader could increase its bid), you can make a reasonable guess that it will. You can also estimate the number of clicks that you’ll get from that #1 ranking by using standard clickthrough ratios (perhaps 5% for a good #1 ad) multiplied by the number of searches for the keyword (which Yahoo! tells you).
Contrast this with Google. Because Google’s AdRank algorithm looks at both per-click bid and clickthrough rate, you can’t know where your ad will land just by knowing how much you bid. Also, Google does not easily reveal the number of impressions you’ll get with your ad, showing you the count for an average bid—not the bid you might choose. This makes it much harder to know how much you’ll pay and how many visits to your site you will get.
The good news is that because Yahoo! is so predictable, search marketers can predict costs and return on investment. But Yahoo! bidders can also play games to force competitors’ bids up, to look for large gaps in the bids to save money, and other such tactics. These (ethical) bidding tricks force search marketers to monitor Yahoo! campaigns much more closely. Some marketers even invest in bid management software or consultants to monitor campaigns for them. That’s the bad news for search marketers who use Yahoo!.
Now Google is making AdWords even easier to manage. Formerly, Google disabled ads that got very few clicks, and warned when your ad was in danger of disappearing. Now, Google says that if you get a very low clickthrough rate, you can still get your ad shown ocassionally if you bid high enough. Similarly, if your ad is so relevant that it gets massive clickthrough, you can pay as little as a penny per click (instead of the five cents minimum formerly charged). Chris Sherman has a good review of the changes at Search Engine Watch. The net effect of these AdWords changes is that the per-click bids and clickthrough rates will vary even more than before, and be even harder to plan than they once were. Again, the upside is that your campaign is even easier to manage than before.
Search marketers who use AdWords should pay attention to these changes and be ready to take advantage. If you have low-cost, high click-rate ads, you might be able to reduce your bids below five cents and increase your ROI. If you have low click-rate ads that Google previously disabled, now is the time to experiment with them again.
