From: T.S.

Hey Jill,

One of your comments [from last week] struck me, and I wanted to comment. Apologies in advance for the length of this, though I'm curious if I'm just crazy or if others have any of the same impressions.

These are my thoughts after advertising with AdWords Select since they launched it. I wish I had the time to test and experiment to really figure out what's going on -- but nonetheless, I'm left feeling that Google is simply interested in increasing revenue at this time -- and for the first time, at the partial expense of their searchers and advertisers.

This stuff is not straightforward, and I feel like they're taking advantage of the idea of "just tell us how much you're willing to pay for that keyword." Isn't that the technique that car salespeople use?

I disagree with your comment: "I don't think that Google got where it is today by operating that way. If they were out to make a quick buck..."

I DO agree that in the past they haven't operated in a way to generate a quick buck, BUT I think they are leaning in that direction now.

In my experience over the past few months, there are a few reasons why:

A) Ad lumping

If I were to buy an ad for "masonry supplies" -- my ad appears lumped in with an ad for 411supplies.com (who seem to appear for all sorts of random "x supplies" searches). Now, 411supplies.com doesn't sell masonry supplies, but they do sell all sorts of "supplies."

This is not good for the person searching (they might click on an ad that's not relevant at all). This is not good for the other advertisers (now we have to compete with people who really shouldn't even be there?). This is not good for 411supplies.com because they'll be charged for clicks that they probably don't want.

This seems only good for Google, who gets to charge if someone does click on the ad.

For our business, we're encountering situations where we're the ONLY relevant ad, yet there are 4 or more to compete with. Talk about diluting our message! And to top it off, if the OTHER ad's maximum cost-per-click (CPC) is higher than ours, then my CPC goes up to boot!

My suggestion:

Google should review all ad/keyword combos to ensure relevance. Yes, it's expensive, but in the long run, it's the only way to maintain relevancy. Overture does this part right.

B) Minimum CPC that makes no intuitive sense (talk about being Googled).

We have some keywords that we're buying where the specified minimum CPC is about $.70. On Overture, these keywords typically cost us $.05.

Now, Google says:

"Minimum cost-per-clicks (CPCs) have been set for Google AdWords Select keywords based on their market value and performance history in the Google AdWords programs."

Problem is, we're the ONLY advertiser for that keyword, and we're the only advertiser for that keyword under the old AdWords program too. There are very few impressions for the keyword. How in the world is the price justified? To me, that's what happens when market forces are not determining prices. It's a closed system to determine minimum CPC, and I think Google is Googling people.

My suggestion:

Dunno, but have it at least make intuitive sense. If I'm paying a lot, there should either be some competition or lots of impressions.

C) Click charges that don't seem to work as you might expect.

For example, we've had keywords where we're one of three advertisers, and say the minimum is .25.

My maximum: .75
Competitor #1 maximum (guess): 1.00
Competitor #2 maximum (guess): 1.25

Rather than charge the three of us like this:
.25, .26, .27

Google seems to be charging something like this:
.75, 1.00, 1.01

Granted, we'd all be paying at or below our maximums, but that's a pretty significant difference and not what I think most people are expecting. And the biggest catch is, you CAN'T tell what's really going on because other advertisers maximums are secret and Google doesn't really talk about it.

The most they say is:

"You simply set the same maximum CPC for all your keywords, knowing that the AdWords Discounter will charge you the lowest CPC necessary to maintain your position for each keyword."

Since I don't know what other people's maximums are, how can I ensure that I'm being charged accurately? Seems like Google can just do what they want and charge at the maximum.

My suggestion:

Tough one; it does give them more revenue, and if people keep buying ads then maybe it's not a problem? I'd probably do the same thing if I were Google, but it may come back to bite them in the long run if people can't run a campaign with the ROI they need.

Thanks for your time.

T.S.

++Jill's Response++

Hi T.S,

Thanks for your thoughts on Google AdWords! I'm probably not the best person to discuss your points, as I simply have my little ad with all the bids set to five cents. I figure five cents isn't much to pay for possible new subscribers to this newsletter, and it brings me a bunch each day!

The man you need to discuss this with is the one that literally wrote the book on Google AdWords Select, Andrew Goodman. (See my review of his ebook.) And guess what? You're in luck! I forwarded your comments to Andrew to see if he'd be willing to provide us with his point of view, and he agreed. His thoughts will definitely give you something to chew on...

++Andrew Goodman's Response++

Given the rampant fraud in the PPC world, Google is virtually the only PPC company I feel passes muster on the trust scale. That's why I recommend them so enthusiastically. There seems to be a certain percentage of advertisers that are suspicious and distrusting of Google. But compared to what? Either directly or indirectly, ad middleman companies like DoubleClick presided over much Internet advertising fraud (fake clicks, pumped-up impressions) in the heyday. PPC companies are even worse. You have to go right up the list, past even the second-tier guys like FindWhat, and yes, even Overture, whose past (prior to the big portal contracts) includes a lot of low-quality search affiliates who generated a lot of fake clicks, and all way up to Google before you reach a company in the PPC space that is truly squeaky clean. It's surprising to me that the reader would make a special effort to criticize the most trustworthy player in the space -- one which keeps its search results free of ads -- when there is so much sleaze out there that merits consideration.

To be clear, I think that Overture's ethical standards are now much higher than they used to be, and a couple of companies might be recommendable (eSpotting, and someday perhaps ah-ha and FindWhat...maybe). But that's about it. Ultimately, as Kevin Lee pointed out at the recent Search Engine Strategies conference, you do have a choice. Track your ROI and decide to "stay, or go."

Google reminds us that ROI calculations need to take into account the lifetime value of a customer.

Some specific responses:

I'm left feeling that Google is simply interested in increasing revenue at this time -- and for the first time, at the partial expense of their searchers and advertisers.

The writer must have Google confused with some fly-by-nighters. They didn't get to be the overwhelmingly favorite search engine with end users by valuing expediency over quality. Why start now?

I feel like they're taking advantage of the idea of "just tell us how much you're willing to pay for that keyword." Isn't that the technique that car salespeople use?

Just a cheap shot. The reality is, this system saves advertisers money and time by discounting their actual spend depending on where their competitors are at in the bidding process. Car salespeople? Google? It would be hard to get this group confused with car salespeople. A cheeeeap shot.

I DO agree that in the past they haven't operated in a way to generate a quick buck, BUT, I do think they are leaning in that direction now.

To me, they're generating a well-deserved and well-thought-out buck. Ad rates in this space will be much higher in five years than they are today. Google's problem is NOT going to be revenues; it's going to be maintaining the confidence of search engine users by not assaulting them with advertising or selling out their index. There is nothing quick about this buck. Google was ad-free for three years. Give me a break.

If I were to buy an ad for "masonry supplies" my ad appears lumped with an ad for 411supplies.com (who seem to appear for all sorts of random "x supplies" searches)

Why shouldn't they?

Now, 411supplies.com doesn't sell masonry supplies, but they do sell all sorts of "supplies." This is not good for the person searching (they might click on an ad that's not relevant at all).

411supplies.com is bidding using Google's syntax to generate impressions on all kinds of searches with the word "supplies" in it, evidently. But Google has rules to avoid "blanketing" the space with irrelevant ads -- mainly, the clickthrough (CTR) threshold -- which its competition, Overture, does not. They also have editorial intervention whereby their people often recommend against using general terms, sometimes even disapproving said terms, but if an ad is performing with a decent CTR, they may allow the ad to show. So what? If your ad is much more relevant, you have to bid much lower than this ad to gain the same rank on the page. Google's "new math" REWARDS RELEVANCE IN SEVERAL WAYS, including making a "small bid bigger" if an advertiser generates a high CTR on a phrase where someone else is generating a low CTR. Sounds like the reader hasn't taken the trouble to learn how Google is trying to address the issue of relevancy, and is just broadcasting a series of gripes in hopes that one will stick. 411supplies' presence in irrelevant areas could well be temporary. (Just remember, if your game is to go tattling on a keyword competitor, expect others to treat you the same way.)

Google also sells premium space for advertisers who want branding on a wider variety of terms. Deep pockets call the shots just as they do in all real worlds of advertising & media. I see eBay and Business Depot showing premium ads for any query containing the word supplies. Hey, they're paying. They're premium advertisers. Last time I checked, that's kinda the way this biz works.

This is not good for the other advertisers (now we have to compete with people who really shouldn't even be there?)

Define "shouldn't." If your definition is too strict (as it sometimes is when Google editorial staff do get involved), the advertiser who supposedly "shouldn't" be there gets upset, since they are paying too. It's about fairness. Google has thought very hard about that.

Longer term, big advertisers will probably make up 75% of their revenue base. Some days Google must wonder whether catering to all the smaller advertisers is really worth the hassle. They no doubt concluded that a show of good faith was always the smart move. And you reward them with insults! :)

I will give you this: catering to the smaller businesses is a *great* move from the standpoint of Google's sales force trying to get bigger businesses to buy ads. Big companies get their noses all out of joint when they see little guys in "their" space, and it's only then that they thunder: "How much does it cost? We want to be in that spot." Unfortunately, unless you're savvy, you'll be bidding head-to-head against those guys in the future. Luckily though, Google's CTR multiplier gives you a fighting chance. Deep pockets alone won't rule the keyword space.

My suggestion: Google should review all ad/keyword combos to ensure relevance. Yes, it's expensive, but in the long run, it's the only way to maintain relevancy. Overture does this part right.

Google has strong editorial oversight. Both Google and Overture have junior editorial staffs as human intervention in the very difficult game of judging what's relevant -- which businesses "count." Sounds as if you'd be happier if you received special treatment. Unfortunately, everyone wants this. It's this very me-first attitude which keeps the load so heavy on the staff of both Google and Overture, and which ensures that advertisers with legit gripes need to wait longer for personal responses.

I'm noticing minimum CPCs that make no intuitive sense (talk about being Googled). We have some keywords that we're buying where the specified minimum CPC is about $.70. On Overture, these keywords typically cost us .05.

Anecdotal evidence of Overture keywords costing .05 and Google keywords costing more is widespread. However, even if true across the board (which I doubt), all this proves is that Google's rates are higher. Google has pricing power. Bad for you, I guess, if you're looking for a free (or really cheap) lunch. Overture gets your ad on all sorts of searches (Yahoo!, Lycos, etc.), but not on AOL, and not on Google.com.

Problem is, we're the ONLY advertiser for that keyword, and we're the only advertiser for that keyword under the old AdWords program too. And there are very few impressions for the keyword. How in the world is the price justified? To me, that's what happens when market forces are not determining prices.

So market forces are good, except when someone you deem irrelevant outbids you? I sense an inconsistency here.

It's a closed system to determine minimum CPC, and I think Google is Googling people.

The minimums are a common gripe. Here, I agree that they're heavy-handed. Again, though, beyond lobbying them for a policy change to lower your ad costs (doesn't stuff always cost more than we'd LIKE to pay?), what have we proven here? That Google is "googling" people? Or that they've set a high price that they see as fair and that you (the buyer) do not? Hardly a federal case. Google is listening to all these complaints regarding the minimums, and they may well make some adjustments in the future.

{long example truncated}... Since I don't know what other people's maximums are, how can I ensure that I'm being charged accurately? Seems like Google can just do what they want and charge at the maximum.

The short answer is I'm not buying it. Essentially, you're calling them liars and cheaters. I guess you can accuse anyone of anything. The gas pumps could be rigged. Parking meters might accelerate time. At some point, somewhere, we have to trust -- or worse, accept that we might be getting screwed relative to what we're told is happening. But relative to some other reality, this life might still be worth living. In a market system, you are free not to buy what Google's selling. But it appears you want "voice," as well. Google *is* listening to your feedback.

Andrew Goodman
Principal, Page Zero Media
http://www.page-zero.com

[Hey Andrew, why don't you tell us what you really think? (grin) - Jill]    

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