How Google have made us all bid higher on Adwords

Google Adwords bidding competitivityHats off to Google; they are an incredibly bright bunch over there. Adwords is perhaps the most intelligent ad platform ever built and Google keep on adding new dimensions to it which make it both more customisable and at the same time less accessible to the average small business owner and also slightly tougher to see exactly what is going on.

They incur the wrath of many marketers due to their constant innovations that tighten the noose a little at a time to just slowly squeeze the life out of us but not enough to kill us off completely.

They have held a monopoly on search for the past 5 years, pretty much worldwide and this grip shows no real signs of change as they continue to innovate and lead with the best and most accurate search engine in the world.

Today I am going to talk specifically about the changes that Google have made in the past few years that have had the effect of increasing the heat on paid search auctions in Google Adwords. These changes are not listed chronologically as my memory does not work in anywhere near a reliable fashion.

Showing top vs other & top of first page bids estimates to advertisers

In 2011 Google released the ability for advertisers to see the variance in the performance of their Adwords ads that showed on top of the organic search results (usually positions 1-3) vs in the right hand column (usually position 4 – 12)

It quickly became clear that the click through rate is so much higher when you run in the top positions: take a look at this screenshot of a single keyword take in the Adwords interface:

Top vs other on single keyword

You can see when the keyword’s ad was shown at the top of the page (in an average position of 2.6) it received an average click through rate of 5.17% and when it was shown in other positions it received an average click through rate of 0.22% (average position of 7.2). So a difference by a factor of x 22.5.

And to just answer the point that a single keyword is not representative here is an aggregate across all traffic to the same account over a 10 day period.

Top vs other account aggregate

So; what is an advertiser to do with this knowledge?

What they should do is to put aside the click through rate and look at the cost per conversion. In both ad positions this keyword received a conversion but the cost per conversion was 2.5 x as high when shown in the top positions as the cpc was twice as high.

However – in this particular case a cost per conversion of £7.98 is still below the target cost per conversion for this account therefore it is still worth bidding up to get more top position impressions, more clicks and therefore hopefully more conversions (assuming all other factors remaining equal).

I checked the variance in the cost per conversion across the account. This is slightly skewed as we are running own brand campaigns and bidding on our own brand in position 1 and getting a good conversion rate with a very low cost per conversion but even without that taken into consideration the cost per conversion is quite even between top and lower position ads:

cost per conversion variance Top vs other in Adwords

Warning – do not take this as a hint to bid up – the reason for this is that we have been analysing for months and now have the better performing keywords in the higher positions.

So anyway – my point is that having this visibility is a strong persuader that the higher positions are worth bidding for as they can get you a lot more traffic.

Ad sitelinks extensions

It has been a good few years now since ad extensions were introduced and now there is a good range with a variety of uses – here is a summary of the Adwords ad extensions.

The ad sitelinks in particular can massively increase the click through rate of an ad – although it is difficult to get true visibility on by exactly how much as there is no clear data at a keyword level or even ad group level of how each particular sitelink performs.

We can compare the click through rate on sitelinks with the campaign as a whole and always the sitelinks click through rate is higher than the click through rate of the campaign as a whole but this is surely because sitelinks are only shown when an ad appears in the top 3 positions.

However; it is a safe assumption that if your ad is twice as big as any other ads then it will be twice as likely to be noticed. Opodo’s ad shows this in the screenshot below:

Screen Shot of Adwords ad sitelinks extension in use

With sitelinks the background is that unless you are running in a high ad position (between 1 and 3) then you have no chance of sitelinks showing alongside your ad and you also need to have a good quality score on the keyword in question. Here are Google’s guidelines around this:

Adwords ad sitelinksTherefore the message is that if you want to inflate your click through rate then you can include ad sitelinks but to get them to work you need to bid up!

Competing with Product Listing Ads

Google are now in the process of transitioning Google shopping from a free service to a paid advertising service in the form of Product listing ads.

Now the paid product listing ads are grabbing some prime spots – usually positions 2 – 4 in my experience in the search ads. These are pretty prime spots and these ads grab a lot of attention as people are drawn to images.

This screenshot shows this pretty well:

Competing against product listing ads

Now, I have a theory on how Google earn more money out of these ads: I think that the chances of a research/re-click are greater when it comes to product listing ads.

You are presented with between 4 and 6 products and you click on one to find out more information on the product page; this can work very well for the user as they get to their end destination relatively quickly. However; there are many many reasons that a conversion may not take place – e.g. shipping costs, product cost, desire to shop around etc etc.

Therefore I think that product listing ads are likely to attract a much higher percentage of people going straight back to Google and clicking on another ad to check another retailer of the same product; thus achieving greater revenue for each user and each search.

Also; for normal search advertisers who are yet to add a feed into Adwords product listing ads they have to compete harder to grab the same attention and traffic that they previously did which will result in harder bidding.

Expanded Phrase and Exact Match

In spring 2012 Google introduced (by default I may add) a change to the phrase and exact match keywords which meant that they would also be entered into a larger number of auctions that include misspellings, synonyms and other slight variations on the keyword. I wrote a rant about this at the time.

Just by default of being entered into more auctions it makes the Adwords landscape more competitive and therefore to maintain positions and traffic advertisers are forced to bid up.

Not having a dig at Google here; I used to moan about the things that they do all the time but what would I do if I was in their position? I like to think that I would come up with as great ideas as these.

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