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Thursday, August 21, 2008

AdWords Quality Score Overhaul: First Page Bids

AdWords Quality Score is set for an overhaul that will introduce first page bids and remove minimum bids. This is a drastic move by Google. According to Inside AdWords:
As a result of migrating to per-query Quality Score, we are no longer showing minimum bids in your account. Instead, we're replacing minimum bids with a new, more meaningful metric: first page bids. First page bids are an estimate of the bid it would take for your ad to reach the first page of search results on Google web search. They're based on the exact match version of the keyword, the ad's Quality Score, and current advertiser competition on that keyword. Based on your feedback, we learned that knowing your minimum bid wasn't always helpful in getting the ad placement you wanted, so we hope that first page bids will give you better guidance on how to achieve your advertising goals.
Translation:
  1. Quality Score was too restrictive. Google was leaving too much money on the table.
  2. Google wants you to bid higher. Google doesn't want any minimum bids.
Think about #2 for a minute. Google could keep the minimum bid feature and simply add a new feature to show the first page bid. Instead, transparency into minimum bids will be eliminated entirely. No keywords will be marked inactive for search and no minimum bids will be visible via the AdWords interface. You won't see all of these values anymore:

adwords quality score

Regarding point #1 about Google leaving money on the table, consider what Sergey Brin said during the Google Q2 2008 Earnings Call:
But clearly that’s not the ideal strategy indefinitely, because we don’t want to end up with no ads. And in fact from a quality point of view, we now find our ads are a significant addition quality-wise to our page. They are just a very important source of information. We’ve been actually re-examining some of that. There was some evidence internally that perhaps we were a little overly aggressive in decreasing coverage in this past quarter.
I do think the introduction of first page bid estimates is a useful feature for advertisers. However, I think it will also spur advertisers to dramatically increase bids. Short term, it will also create confusion - and angst. Long term, I wonder if this means Google will decide to show the bid necessary to achieve top of the page placement. That's been a hidden bid for a long time. Don't look for a "first page, top placement bid estimate" anytime soon, though. ;-)

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6 Comments:

Anonymous Anonymous said...

Thanks for this, Rich. I've never had need to pay attention to exactly what role Minimum Bid plays - is it actually "minimum bid that will probably get any results at all"?

Fri Aug 22, 10:18:00 AM EDT  
Blogger Richard said...

Yes, it's minimum bid necessary to enter the auction for search ads. For advertisers in competitive fields with high CPC bids and/or high Quality Scores, the min bid has been irrelevant. For them, the new first page bid estimates will be useful information.

Fri Aug 22, 12:11:00 PM EDT  
Anonymous Anonymous said...

When you say *necessary*, do you mean "required by Google" or is it more like a tip: "Hey, kid, if you don't bid at least $3 you won't have a chance"?

Dave deB

Fri Aug 22, 12:16:00 PM EDT  
Blogger Richard said...

Hi Dave. Oh, it's been necessary. For advertisers with high Quality Scores, it hasn't been an issue. The elimination of minimum bids won't impact those kinds of advertisers. For those with Quality Score issues, however, they are going to lose visibility into why they need high bids to be on the first page.

IOW, for advertisers currently with low min bids (and therefore high Quality Scores), when the new first page bid estimates come out, they'll be a helpful guide as to what to bid to remain competitive.

However, for advertisers having Quality Score issues, they won't know if a first page bid estimate is high because of advertiser competition or because they need to improve their Quality Score.

Not to sound cynical but this will help Google's bottom line in 2 ways:
1) More revenue as people set first page bids rather than minimum bids.
2) Less customer service expense as complaints about high minimum bids and inactive for search keywords dissipate.

Fri Aug 22, 12:55:00 PM EDT  
Anonymous Anonymous said...

So for example my average cost per click is 20c and the minimum bid to get on the first page is 5c due to excellent quality, can I actually bid 5c? and pay less for being on the same page as 20c.

Wed Oct 01, 10:53:00 AM EDT  
Blogger Richard said...

If your avg CPC is 20c and the estimated first page bid is 5c, you could lower your bid. However, you might not want to. That first page bid is only an estimate. Plus, you might want to be listed *high* on the page, not just *on* the first page.

So, before dropping your bid, I'd suggest reviewing the avg position of your ad for the keyword. If it's an important keyword, make sure you break out the exact match from the broad match. This makes it easier to bid for position - not just first page.

Another thought - your keyword will likely have a different ad rank based on geographic region. So, before adjusting bids, you might want to use the ad preview tool or the ads diagnostic tool to see where your ad ranks for different locations.

Thu Oct 02, 11:26:00 AM EDT  

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