Coming Soon: Improvement to the Top Ad Placement Formula

[rob6188]

Got this message in my adwords account today:

In a few weeks, we'll improve how ads get promoted to top positions above Google search results, giving you greater control over the placement of your highest quality ads. Learn more

The core components of the top ad placement formula will remain price and quality. However, we are improving the way we factor price into the formula. We're also adjusting the way your actual cost-per-click (CPC) is determined for ads in top spots. As always, only ads that meet our stringent quality requirements will be eligible to appear in top spots.

Interesting read.

[GuyFromChicago]

Been hoping for this for awhile.

I have a bunch of ads that will jump to higher spots...no doubt about it.

[Adam Bauthues]

This is great to hear, especially for some of my campaigns! As always we will have to wait and see how it plays out but I have no doubt that we will hear some whining when the hammer comes down...much like we did with teh google slap babies. :-)

[m0rtal]

This should be interesting, looking forward to this.

[Huligan]

Now, if Google would only publish the formula... Or at least tell you what the minimum price is for the top spots for a keyword.

[m0rtal]

Originally Posted by Huligan

Now, if Google would only publish the formula... Or at least tell you what the minimum price is for the top spots for a keyword.

Shouldn't be too hard to figure out. If you're hitting positions 3+ then just start raising your bids a little bit.

[steveyoung]

Does anyone actually believe this is 'good news' for anyone other than google?

[shauvik_bit]

From next week onwards (W.e.f - 13 Aug. 2007 ) Google is set to Improvize its Top Ads Placement Formula -

Previously -

Ranking = Quality Score + Actual CPC (cost per click)


Now -
W.e.f - 13 Aug. 2007

Ranking = Quality Score + Maximum CPC (cost per click)

Any Comments??
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[CustardMite]

Originally Posted by GuyFromChicago

Been hoping for this for awhile.

I have a bunch of ads that will jump to higher spots...no doubt about it.

If I understand the new system, this will increase your cpc as well...

If you're bidding £1 per click to appear top, but only paying £0.20, but Google's new threshold is at £0.50 per click, then you'll suddenly start paying £0.50 per click without warning. You'll have to change your bids to knock you back down to the £0.20 cost per click.

Not a major problem (as long as Google don't change the threshold every couple of days), but I'm betting that a lot of advertisers either won't notice or won't understand.

It's good news for people that understand and can work the system, but I'm guessing that Google will make a lot of money out of people that don't.

It's also going to be a right pain in the asre when working out the most profitable position to advertise in...

[Huligan]

Originally Posted by m0rtal

Shouldn't be too hard to figure out. If you're hitting positions 3+ then just start raising your bids a little bit.

I want to see the minimum bid writen on a page in Google AdWords. I would prefer not to have to waste time in guessing since I may want bid just above or below the minimum bid. In addition, Google decides how many ads they want to display in the top area. It varies from 1 to 3 based on keyword.

[GuyFromChicago]

Originally Posted by CustardMite

If I understand the new system, this will increase your cpc as well...

If you're bidding £1 per click to appear top, but only paying £0.20, but Google's new threshold is at £0.50 per click, then you'll suddenly start paying £0.50 per click without warning. You'll have to change your bids to knock you back down to the £0.20 cost per click.

I think you misunderstand how this will work. Rather than me trying to rehash, see this from SEL:

For example, say I have an ad with a maximum CPC of $0.50, but there are no competitors in my keyword ad space. In that case, I will probably pay an actual CPC of $0.05 and not the $0.50, since I'm not competing against anyone.

In the past, Google used the actual CPC in the ranking algorithm for the top ad position. In the future, Google will be using that maximum CPC. As you can see, this gives advertiser more control on achieving that top ad position. Back to our example above. This advertiser who has been noticing a $0.05 actual CPC, will now be credited for his maximum CPC of $0.50 and will thus have an easier chance at obtaining the top ad spot.

&

Postscript 2: To clarify, you will not be billed the maximum CPC for those top ads. You will still be charged the "actual" CPC. Google sent me this additional information about this concern:

Your actual CPC will continue to be determined by the auction, but subject to a minimum price for top spots. The minimum price is based on the quality of your ad and is the minimum amount required for your ad to achieve top placement above Google search results. As always, the higher your ad's quality, the less you will pay. And you will never be charged more than your maximum CPC bid.

Full - http://searchengineland.com/070808-170001.php



My CPC won't increase, I'll just get credit for my max bid(s) instead of the actual.

Originally Posted by CustardMite

If I understand the new system, this will increase your cpc as well...

If you're bidding £1 per click to appear top, but only paying £0.20, but Google's new threshold is at £0.50 per click, then you'll suddenly start paying £0.50 per click without warning. You'll have to change your bids to knock you back down to the £0.20 cost per click.

Not a major problem (as long as Google don't change the threshold every couple of days), but I'm betting that a lot of advertisers either won't notice or won't understand.

It's good news for people that understand and can work the system, but I'm guessing that Google will make a lot of money out of people that don't.

It's also going to be a right pain in the asre when working out the most profitable position to advertise in...

Exactly right - It will be good for people who understand and can work the system - also, it will benefit advertisers with deeper pockets. For SME's it will not help at all.

It will also help Google, who's net profit margin was down this past quarter compared to last I believe...

hmmm.

[transburgh]

Originally Posted by GuyFromChicago

My CPC won't increase, I'll just get credit for my max bid(s) instead of the actual.

I get your point but the majority of us to have competitors and this will push our CPC up, especially if you compete against deep wallets.

[CustardMite]

Originally Posted by GuyFromChicago

My CPC won't increase, I'll just get credit for my max bid(s) instead of the actual.

Got it...

In that case, bring it on...

[GuyFromChicago]

Originally Posted by transburgh

I get your point but the majority of us to have competitors and this will push our CPC up, especially if you compete against deep wallets.

You are correct - this could (and most likely will) drive up prices (ie - actual CPCs) for some advertisers who covet the top spot.

I blogged about this earlier today. I won't repost the entire thing but I think I echoed your feelings with this comment:

The only real variable here is the Max CPC. Everything else is an even playing field. Ads, landing pages, keyword selection, etc can all be built to the highest standards by a guy in his basement just as easily as they can be by a large team of paid search pros. So what's the real variable? What separates the little guy from the big players?

Money.

The big guys will always be able to significantly out bid the little guy. It's not even so much what they actually pay as what they are willing to pay. The guy in his basement can build a perfect landing page, get all the right keywords and write perfect ads and he'll still have to settle for positions other than #1 if big money moves into the space

I for one will be watching this closely.

[transburgh]

Originally Posted by GuyFromChicago

You are correct - this could (and most likely will) drive up prices (ie - actual CPCs) for some advertisers who covet the top spot.

I blogged about this earlier today. I won't repost the entire thing but I think I echoed your feelings with this comment:



I for one will be watching this closely.

Yes, I rss your blog and read it regularly. Very informative and a good resource.

[m0rtal]

Originally Posted by shauvik_bit

From next week onwards (W.e.f - 13 Aug. 2007 ) Google is set to Improvize its Top Ads Placement Formula -



Any Comments??
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Where did you get the date from?

I am actually looking forward to this to drive out some direct linkers

[scuba5794]

I can't wait for this to happen i manage a google campaign with about 3k keywords spanning about 300 adgroups. because of the way i setup the account i have acheived excellent quality score for nearly all of my keywords, my time and hard work will finally (hopefully) payoff when this system is implemented.

[selltrib]

Originally Posted by steveyoung

Does anyone actually believe this is 'good news' for anyone other than google?

This was my first thought, How does this benefit me.

Originally Posted by GuyFromChicago

You are correct - this could (and most likely will) drive up prices (ie - actual CPCs) for some advertisers who covet the top spot.

I blogged about this earlier today. I won't repost the entire thing but I think I echoed your feelings with this comment:

I for one will be watching this closely.

Once I read your blog I can now understand how it's going to work and think it's going to be a great improvement get rid of some of those 1000+ keyword spammers I hope.

[CustardMite]

It's probably going to push some of my adverts up to the top of the page.

What'll be more interesting is the impact on the adverts that 4th - 6th (or so) - if they appear above the fold, will the impact be positive, or will the higher profile of their competitors negate it...