<< by Kaitlyn Smeland Dhanaliwala on September 2nd, 2008
The recently announced changes to Google’s measure of Quality Score have gotten some attention lately, some positive and some skeptical. The three main changes to the way Quality Score will be calculated have to do with frequency of calculation, bid requirements, and treatment of “poor” keywords in the AdWords account. According to the AdWords blog:
Ads’ quality scores will be calculated each time a relevant search query is performed.
No More “Inactive For Search” Status
All keywords will be allowed to run at all times, but they might not receive competitive placement if they have low quality scores and/or bids.
First Page Bids Instead of Minimum Bids (…Pay Attention to This One!)
The official line: “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.”
This third change, replacing minimum bid with the metric “first page bid,” provokes the most skepticism.
The reason Google provides for this change is that merchants requested this knowledge. Ok, of course it would be nice to know the minimum amount required to bid for a keyword to get it listed on the first page of results.
But one factor in the equation for calculating first page bids raises a lot of questions- “current advertiser competition.” In an “economy” where nearly perfect information is available-like the new first page bid system- CPC will be driven up at a much faster rate than the current system. When merchants look in their accounts and see that Google has provided them with that magic number that will allow them to reach the top ten listings, many will bid up to that level immediately.
Think about it in terms of one isolated search query- if all competitors knew what they must bid for that keyword in order to reach the first page of results, AND more than ten merchants have chosen to place that bid, then the metric is rendered pretty useless. Demand for those ten spots will surge, so the cost will either increase exponentially or competitors will have to accept lower impression shares.
As of now, not all AdWords accounts have seen these changes go live yet. We’ll have to wait until they roll out completely to see the effects. But at first glance, it seems like the first page bid system has been developed to generate more revenue for Google, with an exaggerated claim to provide merchants with an advantage.