New Adwords Rules

On the 21st of August, Google changed the formula it uses to decide which sponsored ads show up above the natural search results.   

The basic formula for judging which ads show up was as follows:

Ad position = Quality Score X Actual Price advertiser is paying per click

The new changes will replace the actual price an advertiser is paying with the maximum price an advertiser is willing to pay peer click.

The changes have been controversial to say the least.  Some have even accused Google of trying to milk advertisers for all they’ve got (this is the name of the game after-all isn’t it?)

 What is Google’s justification for the change?  The official line is:

Actual CPC is determined, in part, by the bidding behavior of the advertisers below you. This means that your ad’s chance of being promoted to a top spot could be constrained by a factor you cannot influence. By considering your ad’s maximum CPC, a value you set, you will have more control over achieving top ad placement.

In addition to increasing control for advertisers, the improved formula increases the quality of our top ads for users. This is due to more high quality ads becoming eligible for top placement, thereby allowing our system to choose from a larger pool of high quality ads to show our users.

The bottom line is this, if Google’s changes mean decreased ROI for advertisers, eventually these advertisers will move to a more profitable advertising model and Google will lose business…

I’m pretty sure the big G is a bit smarter than that!