ClickEquations Blog

Today, I’ll present on the “SEO vs. Paid search: Balancing the two to raise the total tide” panel at the Online Marketing Summit. Along with Jamie Smith of Engine Ready, I’m representing the PPC side of the table with SEO heavyweights Chris Boggs of Rosetta (and President of SEMPO) and Rand Fishkin of SEOMoz on the organic side.

It’s a well covered topic and we on the panel all agreed that an “either/or” argument was too cliché. Let me suggest there are 3 fundamental things that form the basis of any PPC + SEO discussion:

1. Everyone should be building search engine friendly websites and, as their resources allow, doing SEO in its proper form (content development, research, link building, etc.)
2. Most businesses will find paid search to be a profitable way to acquire customers, because of the high degree of intent from searchers and the ability to target, value and satisfy that intent on a granular basis. A simple pilot to measure incremental profit from the channel will tell you.
3. Having an organic listing when you have a paid list is probably a good thing. Having a paid listing when you have an organic listing may be a good thing. Your mileage may vary and there are ways to test and measure if you don’t trust people who have done it before.

My focus is on one trend that is changing the nature of the search engine results pages (SERPs): the shift in the balance between paid and unpaid listings.

Consider this search for “anti virus software” as an example*:

Paid search ads dominate the search results. In fact, the only organic listings you can see are AVG and avast! (I’m counting the Shopping results as ads).

The total number of possible ads hasn’t changed. Given adequate advertiser interest, bids, ad quality and the commercial intent of the search, ads could always fill the top 3 slots (aka premium position) and the right column.

What has changed is the space taken up by, and visual dominance of, the ads in several ways:

1. Most notably, there are now display ads in the SERPs. Google’s Product Listing Ads show product images on the top 3 positions in the right column.
2. As of last week, ads are now showing longer titles that pull in the first description line, mimicking the title tag of organic listings
3. Most ads in the premium position will show site links, effectively adding another line and 4 more calls-to-action to the ads
4. Retailers with an sufficiently high number of positive ratings will get a call out with stars and the number of reviews, distinguishing the ads again and contributing yet another line to the text ad
5. The background of the ads has switched to pink. Personally, I find this harder to distinguish vs. white than the previous yellow and blue incarnations.

This is the most dramatic example, but we see it in other searches as well:

“kitchenaid mixer”

“yoga bag”

I have always thought of Google as a publisher and each search results page simply as content they need to monetize. These changes are similar to a news site stacking on more ad slots or increasing the size of their ads.

But, where a traditional publisher’s ads don’t really compete with the content, Google’s ads do. Paid search ads may now draw attention away from organic listings and push natural results further down the page.

In essence, paid listings may be getting clicks at the expense of organic listings at an increasing rate.

At the very least, it puts more pressure to be among the top organic listings as they lose prominence in the results. It also adds important context for your SEO analysis, essentially a new set of competitors with new tactics.

On the flip side, paid search ads now offer an increasing number of ways to advertise in the SERPs. There are more levers to pull, formats to try and offers and messages to test. If you’re weak in the organic listings, these new controls may give you an edge.

One final note: not every industry will be affected by these changes equally. In some cases, there are few, if any, paid competitors. For example, media and entertainment searches such as “justin bieber” or “somewhere movie” are dominated by video, image, news, and real time results among the usual organic listings.

*Screenshots are from my Dell D620 laptop. Your experience may look different based on screen size and personalization of search results.

This is a repost of my monthly column from Search Engine Watch.

2011 will be a pivotal year for paid search advertising. Trends set into motion last year – new ad formats, an emphasis on display, a local ppc push – are on a collision course with the new complexity in advertising and the maturation of online marketing.

This is the year that will fundamentally change how we think about and buy access to prospects, namely keywords. 2011 is the dawn of paid search without keywords.

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Changes from 2010: Universal Paid Search

For years, Google’s search results were dominated by the “10 blue links” – simple headlines, descriptions and URLs to entice and satisfy searchers.  Until it wasn’t. Universal search wove in images, video and real-time updates.

For most of its history, too, AdWords been presented in a text format even as the search results morphed into a multimedia experience. The result is that attention was pulled towards organic results at the expense of ads.

Google countered that trend with their big push for universal paid search in 2010. It was, perhaps, the most radical evolution to the paid search results since the introduction of Quality Score. Consider the changes:

• New Ad Formats – Text is no longer the exclusive medium for advertising on Google. No format exemplifies that more than Product List Ads (and their cousin, Product Extensions). There is no headline, copy or display URL. Instead, it’s just a product image, name, price and vendor slotted in the highest positions on the right side. What’s more, you don’t choose keywords. We also saw display creep into image search results with Image Search Ads and traditional display ads
• New Calls-to-Action – The way you satisfy your search with advertising on Google has evolved as well. Most notably, through the introduction of click-to-call as an option for mobile search ads (as well as the limited release AdWords call metrics). Similarly, more and more of the site experience is being pulled into the search results. The beta Comparison Ads creates a marketplace for loan and credit card comparison all on Google. The call to action is comparison and filtering, not just clicking on an ad.
• New Buying/Monetization Models – Cost-per-click (cpc) and cost-per-thousand-impressions (CPM) are no longer the only ways you can buy. Comparison Ads are sold on a cost-per-lead basis. Product listing ads are sold on a cost-per-acquisition (CPA) basis for some advertisers (CPC for most).
• New Display Targeting Options – Remarketing (aka retargeting) brought highly focused display buys to the AdWords interface. Specifically, the ability to only show display ads to segments of people who visit your site, in many cases after clicking on a text ad.
• New Advertising Automation – In a move that radically simplifies advertising for small businesses, Google began testing Google Boost. It involves no keyword research and no bidding. If you have a Google Places page, you can even do it without a website. It’s virtually hands-off advertising for SMBs.

Of those changes, Google Product Listing Ads and Google Boost offer the best glimpse into the future of paid search without keywords. They’re notable for dramatic departures in every step of how you advertise on Google:

• Targeting – automated targeting towards certain audiences as determined by Google vs. keywords chosen by the advertiser
• Ads – Product listing ads bring a product search like result in the top position in the right column and Boost promotes a map-like result in a preferred position above organic results.
• Pricing – CPA and monthly budget caps replace daily budgets and CPC bids.

These changes underlie some of the key trends that will shape paid search in 2011.

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Trends that Will Shape Paid Search in 2011

In order for Google to continue their pace of growth, they need two things.

First, they need to another line of business to complement AdWords and display advertising is it. They’ve pushed even more aggressively into the channel, most notably with the acquisition of Invite Media, a demand side platform.

Second, they need to remove obstacles to profit and incremental growth within AdWords. These barriers are primarily how wide advertisers target and how much they pay for the people they reach (see: Why Google Wants to Eliminate Bidding In Exchange for Your Profits).

As ad formats and advertising choices multiply, so does complexity. The third barrier to incremental growth is bringing new advertisers into the market and generating add-on revenue from existing advertisers. That requires reducing barriers to entry and scale.

The solution to both of these problems was laid out in part in Nick Fox’s keynote at Search Engine Strategies in 2009. Start the video below at 4:45.

His vision of search in 5 years is already here today and my prediction is that paid search without keywords will become even more prominent in 2011.

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The Dawn of Paid Search Without Keywords

As search marketers, we’re used to buying based on intent as expressed in the search query. We do that primarily through keywords paired with match types and bids.

In paid search without keywords, intent is just one of 5 ways we’ll target prospects:

1. By Intent – Search behavior, as expressed through search queries.
2. By Audience – Demographics and psychographics, similar to traditional media and display ad buys
3. By Business Type – Certain verticals (personal finance) and markets (small businesses) will have special targeting
4. By Product – Online retail is one of the biggest spenders online and Google’s Merchant Center can bridge products and ad space
5. By Behavior – Prior behavior and interests can make some audiences more valuable than others

We’re seeing this already today in various forms, such as Product Listing ads and buying on the Display Network. Kevin Lee offers a compelling vision of how real-time bidding could further expand the way we buy paid search.

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How We’ll Advertise on Google

The difference between how we buy paid search today and buying without keywords is fundamentally about subtraction instead of addition.

Think of a paid search account today. We target a niche and then gradually add other targets that define your total potential universe. We’re adding pieces to make a whole.

To consider the other side, let’s take the example of Product Listing Ads. We don’t choose when our ads show up; Google does. But we can set limits of what we’re willing to pay, effective preventing products from potentially showing up. We’re starting with a whole and subtracting out pieces.

Remarketing offers a model for how this process will work.

• We can set the target audience you want to reach, say people who put an item into their shopping cart.
• Then, we can establish exclusions to remove some undesirable part of the audience, say those who complete a purchase (cart recovery being the desired goal in this example).
• Finally, we set preferences for your buy – frequency caps, etc.

In paid search without keywords, we’ll start wider and have to be vigilant about segmenting and excluding. We’ll also have to start dealing with a very sophisticated competitor: Google.

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Google as Competitor

There is something of a quirk in how new keyword-less features are being added, that presents a new dynamic in the auction. In some cases, these new tools offer a choice between managing the advertising, or at least the bidding, ourselves or giving full control to Google, as is the case with CPA pricing for Product Listing Ads.

That creates a hybrid auction where some advertisers are controlling bids, while Google changes the bids of others while deciding whether both are eligible/relevant to appear. In effect, you are placing your bidding wits against Google’s.

It remains unclear what controls these new ad formats will include, what degree of reporting and the impact to traditional text ads, which will also compete for space and attention.

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What’s Coming Next in Paid Search without Keywords?

It wouldn’t be a good predictions article unless I put my neck on the line with some solid ideas about what 2011 will hold for paid search marketers.

I think 2 things are especially likely:

• Impression Based Retargeting – Retargeting was a huge step forward for Google in display last year. But, they’re leaving the fast majority of the opportunity on the table. If you’re average clickthrough rate is 5% (which would be generous for some), then 95% percent of you’re the people who were served your ad aren’t even eligible to be retargeted to. But, what if you could target someone who searches, say, “organic dog food” with a banner ad on the Display Network? It opens ups a world of possibilities and budgets.
• Automated Inventory Based Product Ads – I always think it’s interesting that Google created an umbrella category for Product Listing Ads and Product Extensions called Product Ads. With retail being a significant vertical in paid search with large, constantly change inventory, I expect Google will continue their push to use Google Merchant Center. For example, we could easily see automated retargeting or regular banner ads filled with products you viewed or searched for, just like Criteo is doing today with Zappos.

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What This Means for Advertisers and Agencies

No one but Google knows what’s coming. But, it’s clear that everyone needs to get comfortable with audience based buying, starting first with retargeting. The skills and tools to understand, target, and bid on various audiences exist today. Now there’s an increased urgency to dig into them.

On a final note, I specifically resisting the linkbait urge to title this post “the death of keywords”, because they’re not going anywhere. AdWords is too critical to Google’s bottom line to disrupt that revenue until new ad formats and monetization models are proven and well adopted.

One thing is certain, though: the future of paid search without keywords is coming in a big way in 2011.

This post originally appeared as my column in Search Engine Watch.

As paid search marketers, we generate profit by minimizing our cost (CPC) and exposure (keywords) to those that are most valuable.

As a publisher (search results are just page views that need to be monetized), Google generates profits by maximizing page views and their profit per page view. It works like this:

(click to enlarge)

The friction between our goals versus Google’s is concentrated at the point of their profit per page view. We want to get as many profitable clicks as possible at the least possible price. Google wants to sell as many clicks as possible clicks to us at our minimum acceptable profit, which in turn maximizes their revenue per click and page view.

We want to limit our targeting and decrease our cost.

Google wants to expand our targeting and increase our cost.

There are 2 barriers in Google’s path to higher profit per page view:

1. The keywords you choose. The narrower your scope, the fewer ads displayed per page view
2. What you pay per click. The lower your CPC, the lower their margin per click.

In this article, I’m going explain you how Google is systematically trying to remove these barriers to their profit, show you how it impacts your business and give you options to respond.

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The Old Way: Asking You To Increase Your Exposure

Traditionally, Google has used two levers for increasing your targeting.

First, they can expand your targeting with your grudging consent. When you choose to use broad match, you are willingly accepting Google’s imperfect matching algorithm to save time. Case in point: they have recently increased the types of queries your ad shows up for when you use broad match. They’re already doing this with session-based retargeting (here, and in my article The Rise of Universal Paid Search). There’s no way to opt-out of that option, though there’s a limit to what they can do.

Alternatively, Google can also try to persuade you to broaden your targeting yourself. This is the thrust of the AdWords opportunities tab. Here, Google presents you with a list of potential keyword additions with the caveat that your mileage may vary. By facilitating the process of keyword expansion with the Opportunities tab or the Search-query Based Keyword Tool, they hope to get you to volunteer to expand your reach.

Neither of these methods is particularly efficient at growing Google’s profit per page view. Expanding broad match still anchors your potential reach to your basket of keyword and facilitating keyword research relies on the advertiser to do something.

Imagine, instead, that keywords were taken out of the equation entirely. Think about a scenario where Google could show your ad for any keyword related to broad descriptions of your business and target audience or even a scenario

This isn’t some farfetched idea. It’s actually happening right now with Google Product Listing Ads.

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The First Step in Paid Search Without Keywords

Google Product Listing Ads shows image of products, without text ads, in search results, thereby disrupting the standard presentation of just text ads on the search results page. What’s most interesting is that keywords don’t determine when the image ads appear:

“Product Listing Ads requires no keywords or additional ad text. Whenever a user enters a search query relevant to an item in your Google Merchant Center account, Google will automatically show the most relevant products along with the associated image, price and product name”

Here’s what they look like:

Even more revolutionary, Google doesn’t charge a cost-per-click. The ads are sold entirely on a cost-per-acquisition basis (more on that in part 2):

“Product Listing Ads are charged on a cost-per-action (CPA) basis, which means that you only pay when a user clicks on your ad and completes a purchase on your site.”

More details here and here and in the broader context of Universal Paid Search.

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Our Keyword-Less Future

The idea of keyword-less paid search isn’t new. In fact, Nick Fox introduced the idea at Search Engine Strategies last year. His interview with Web Pro News offers a recap (more here):

It shouldn’t be a shock that Google is trying to remove keywords from the equation. They are an inefficient way to get advertisers to spend money.

What is surprising is just how quickly Google has integrated a keyword-less version of paid search among more standard text ads. And, they did it without the opportunity for image ads driven by keywords or detailed reporting and analysis.

Google is creating two AdWords ecosystems: those who rely on Google to manage their paid search and those who don’t.

Last week’s announcement of AdWords Search Funnels is an imporant milestone, legitimizing and expanding the visibility, role, and in many cases capabilities of PPC revenue attribution.

Reviewing the basic features and watching the introductory video, it’s clear that the Google folks really thought about this and put a lot of time into the development of these features. They’ve brought and advanced topics to the masses of AdWords advertisers, and included new capabilities that do more – in some ways – than any other attribution system I’ve seen.

But in reviewing the basic announcement information, an issue came to mind worth thinking about before and separate from a detailed feature review.

Search Funnels Require AdWords Conversion Tracking

You can’t use Search Funnels unless your site is tagged for AdWords Conversion Tracking. This is also true of the Content Network View-Through Conversions, AdWords Conversion Optimizer, and other features.

Obviously, this is a reasonable technical requirement – they need to know about the conversion to make calculations related to the conversion.

But let’s say in public what everyone talks about in private – do you really want Google to see your conversion information? Does it hurt us collectively as advertisers every time someone shares their conversion information with Google?

Certainly they are using this data for good purposes in terms of these features.

But are they also using this data against you and all of us?

The Fear

I often refer to AdWords as a game. It’s a game we play on Google’s board and against both other competitors and against Google.

And Google makes up the rules. They share whatever portion of the rules that they choose, and hide many others. They also get to see, in large part, your hand. They have tons of data that you don’t have. Don’t ever get the idea that anything about what is happening is fair. It’s unfair.

But you agreed to the rules and realities when you ‘decided’ to play.

So given that Google is making up the rules, taking your money, seeing your bids and clicks, setting your Quality Score, deciding when your ads are shown and when your competitors ads are shown, seeing when you make budget shifts, watching your CTRs raise or drop, and everthing else, do you really want them – your dealer and competitor – to know how many items you sell, and the amount of money you sell them for?

Here’s one fear: If they know you make a lot of money off of certain keywords, isn’t it possible that they decide you’re not paying enough for the clicks on those keywords? Might the minimum bid or quality score required to be on top instead of right suddenly or slowly rise?

We don’t know anything about how they decide how many ads to show on a specific keyword (some get none, some get 3, some get 8). We don’t know all the factors of quality score which drive our costs. We don’t know how they set the minimum prices for either eligibility for the auction, or positioning on top.

Do you really believe that directly or indirectly, all the ways they’ll study and process the info they learn from tracking conversions and revenue won’t impact the formulas that decide these things in the future?

Google: want to categorically state that it’ll never have any impact?

Here’s another fear: If they see that you really are making a ton of sales and revenue from certain keywords, might there not someday be a Google branded business that becomes a direct competitor to you?

The absolute fact is that as Google ads features and enters markets, there is less reason for searchers to leave Google and the creep of that progression makes it easy to envision Google Travel or Google Autos or Google Real Estate or Google Movie Tickets or Google Cell-Phones (oops, too late), or Google (paid) videos or Google e-books, or Google anything else. And if you’re Google, why not go into businesses you know are profitable? And for which you even know which keywords lead to profit.

About 80% of that seems highly unlikely. But you can’t look at the natural progression and expansion of the company and believe that all of it is. I’m clearly stating that most of that is a very paranoid view and one I don’t hold, but I can’t say exactly which sliver isn’t.

Anyone want to assure or guarentee what business segments Google won’t move into for the next 10 years?

Yes, We Benefit Too

Of course, each of us get great benefit from sharing the conversion data with Google. All of the conversion dependant features mentioned above are fantastic. This is the rub. This is why it is, or at least may be, a deal with the devil but a deal none-the-less.

The point of this post is to at least make you aware of the risk, of the issue, so you can include that information in your thinking and decision making process. It’s not a no-brainer.

In fact, the truth is it’s pretty darn hard to resist what they’re offering. But it’s easy to see why you should. I really think it’s a very tough decision.

The cards are stacked in Google’s favor. In many ways the features they’re providing with Search Funnels and Conversion Optimizer and View Through Conversions, and many more to come I’m sure are almost necessary to play the expensive game we’re playing.

And the fact is that as soon as one of your competitors opts-in, and Google has the data, they essentially may as well have yours. Being the last hold-out probably doesn’t accomplish very much.

On the other hand, I’ll make a highly charged and sensationalistic analogy in the interest of controversy that may drive blog traffic – it’s a little like buying oil that we all know finances our enemies. You don’t want to do that, but you don’t want to walk to work either. Tough call.

The Way Out

As a final thought, I’ll offer a solution. Google could share via their API all the info that third parties (like ClickEquations) need to provide these same capabilities using our non-Google conversion tracking. Today they use proprietary and secret data that we don’t have, so we can’t offer fully competitive features.

For example, ClickEquations already includes powerful attribution and many of the capabilities just released in Search Funnels. But they can show funnels based on impressions and we can’t. If they would just kindly make keyword-level impression view data trackable by us and our competitors, we’ll be happy to offer similar functionality. The same is true for view through conversions – we can’t offer it because they don’t make it technically possible.

Google has a history of addressing these issues via increased openness. Slowly but surely. Their opt-out tracking capabilities for users, and the Google Analytics opt-out plug-ins currently being tested come to mind. These aren’t exactly the same kind of requests, but I’m writing this realizing that Google probably would consider and eventually will share this data with us.

They Have The Right

And given the way this post could be read, I’ll also clarify that I don’t think or mean to imply that Google is doing anything that isn’t legitimate, aggressive, and appropriately self-serving business practice. They’re supposed to grow their company and revenues, offer new features to clients, improve their competitive position, and even find what they believe to be the balance in using the power they obviously have. I think they do all of these things extraordinarily well.

But those of us on the advertiser side of the table should at least make our decisions equally thoughtfully.

Pundits are already calling 2009 “The Great Recession”. Search marketing has been more recession resistant than other industries, but advertising overall has taken a hit.

It’s no surprise, then, that when you look back at the year in significant Google AdWords changes one thing comes through loud and clear: Google is wringing every penny out of SERPs at the expense of organic search.

Advertising on the Google is becoming more competitive and more complex. The timeline below shows the key changes made to Google’s AdWords program in 2009.

As you can see, many of these changes pull attention away from organic listings: AdWords site links, Product extensions and even the location of the ads on the right, to name a few. (FYI – This timeline is embeddable on your site or blog).

If I missed a notable announcement, please comment.

2009 AdWords Changes Timeline

• January 13, 2009 – New Features in Google Maps Ads
  Google adds a new “info window” for Google Maps and extra analytics. Google is actually pulling some of the more common tasks users do for businesses (ex: getting directions) into the window.
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  This is significant, because each of these “micro-conversions” represents an action that approximates ROI for your local business. Analyzing and optimizing around these activities and others will help improve your ad spend.
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  It’s also interesting to note that Google is pulling more of the site experience to their site vs. yours, a trend we also see in the comparison ads (detailed below).
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• February 20, 2009 – Updated Display URL Policy
  Disallowed multiple display URL domains within a single ad group. All text ads must now have the same top level domain.
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  For example, www.clickequations.com/blog, www.clickequations.com and www.example.clickequations.com would all be acceptable in the same ad group. However, you could mix www.clickequations.com and www.clickequations.paidsearch.com in the same ad group, for example.
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  The display URL affects your CTR, conversion rate and is a factor in your Quality Score, so it’s important to monitor changes to their policies.
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• March 4, 2009 – Expandable Rich Media Ads on the Content Network (beta)
  Expandable rich media, which offer interactivity and video streaming, was opened to beta advertisers on the content network.
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  Rich media has to be measured differently than traditional display ads, which is limited to impressions, clicks and post-click activity (though viewthroughs are now available, see below). Rich media, meanwhile, can be expanded and interacted with in a variety of ways: video plays, form completion, etc.
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  This also introduce an element of complexity in the analysis of your traditional display campaigns. How often are you competing against rich media ads? How does that affect your performance?
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  These questions aren’t easily answered today, but will become more important as the number of advertisers and media formats increases on the Content Network (see DoubleClick announcement below)..
  
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• March 11, 2009 – Interest Based User Targeting on the Content Network (beta)
  New behavioral and interest-based targeting on the content network. Content network targeting has been keyword based or placement targeted (you select from a list of sites).
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  Google is now classifying people into groups based on their visits to sites running AdSense, ex: Shopping – Coupons and Rebates. You can now target these groups without specifying keywords or choosing particular placements.
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  Display advertising is one of Google’s key focuses in 2010, so it’s likely that we can expect more targeting options going forward.
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• March 12, 2009 – Hal Varian’s AdWords Auction Video
  Google’s Chief Economist explains the AdWords auction. In this video, Hal Varian shared a lot of detail that helped illuminate some important concepts: clickthrough rate is the number one factor in Quality Score, your bid actually plays an indirect role in the final calculation of your CPC, and increasing your Quality Score could save you 20% or more.
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• May 14, 2009 – Google Loosens Their Trademark Restrictions
  You can use trademark terms in your ad text in the U.S. even if you don’t own the trademark. Previously, Google permitted you to bid on trademark terms, but not use them in your text ad. Now, “you can use trademark terms in your ad text in the U.S. even if you don’t own that trademark or have explicit approval from the trademark owner to use it.”
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  You can expect increased competition among branded and trademarked terms from retailers, resellers and affiliates. Tools like The Search Monitor can help you monitor trademark use.
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• June 17, 2009 – Import Google Analytics Goals into AdWords
  Advertisers who use Google Analytics can now import conversion goals into AdWords (click to enlarge). If you’ve tagged your site with Google Analytics, you can substitute that measurement for the Engine specific conversion tags to measure conversions and revenue.
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  To use this feature, advertisers must opt-in to share their data with Google products or Google products and their benchmarking services. Keep in mind that both Google AdWords and Google Analytics currently default to last click revenue attribution.
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• July 24, 2009 – Local Extensions for Local Business Ads
  Displays address alongside the text ad for relevant searches. Local businesses can now link their Local Business Center account to AdWords.
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  Your location will now appear alongside your text ads in one of two ways. Either you can associate specific location extensions with individual ads or let Google dynamically match eligible locations to a user’s location (usual determined by IP) or geographic modifiers in their query (ex: philadelphia gym).
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  These extension replace the local business ads format, but differ in two important ways:
  - Business title: You will no longer be required to have your business title be the first line of your ad text.
  - Targeting restrictions: By default, enabling ad extensions at the campaign level will not limit your ad targeting.
  Unfortunately, Google hasn’t released any reporting to help you understand when local extensions appear and how they affect your performance. Make sure to test your text ads and set your geo-targeting options properly as you transition over.
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• July 30, 2009 – New AdWords Interface
  Google redesigned the user interface and features in their web-based editor for AdWords. Reaction was mixed, according to some polls.
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  Most notable was the addition of the Opportunities tab, which pulls together a number of tools and automatically suggests changes or additions to advertisers accounts. Devin Sandoz said that this is a key area for 2010, which means we can expect to see more features.Right now, the tab primarily presents suggestions for keyword additions.
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  The relevance of these words varies wildly, so be careful with your additions and make sure to mine your search queries.
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• August 3, 2009 – Bid Simulator Launch
  Google new tool to estimate impressions, clicks and costs at different bids (click to enlarge). The data, calculated on a rolling 7 day basis and only for higher volume keywords, is an unusual move by Google to increase transparency into the bidding process.
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  You can see the potential (though theoretical) trade offs between impressions, clicks, CPC and total cost at various Max CPCs. As Hal Varian explains in another great video, you have to look at the incremental cost and profit per click, not just the potential traffic change.
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  This, combined with Google’s research showing that conversion rate doesn’t vary by position, can help you make more informed bidding decisions. Of course, you still need to optimize your Quality Score. For more detailed analysis, check out our article on Search Engine Land..
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• August 6, 2009 – Google Moves Paid Ads Closer to Organic Listings
  Ads on the right side of the search results are now closer to organic listings. Previously, ads were set to a fluid width. As a user’s browser screen stretched, the ads moved further away from the organic listings, staying close to the scroll bar.
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  Now, the ads stay fixed to the right side of the organic search results regardless of browser window size. While there aren’t any hard statistics, it’s likely that paid search clickthroughs increased at the expense of organic results.
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• September 17, 2009 – The DoubleClick Ad Exchange is Integrated on the Content Network
  DoubleClick Ad Exchange sites are now part of the Content Network. Google has been aggressively pursuing the display ad market, first with its acquisition of DoubleClick and then with the introduction of the DoubleClick Ad Exchange.
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  Now, that exchange is connected to the Google Content Network (sites which run AdSense).  This vastly increases the inventory of sites that your content network targeted ads could show up on. Make sure you run you run regular placement reports to see how these new sites could affect your performance and exclude sites where appropriate.
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  To learn more about the content network, download David Szetela’s book, Customers Now..
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• September 30, 2009 – Viewthrough Conversion on the Content Network
  New reporting about “where your ad is seen, but not immediately clicked on”. As part of Google’s expansion into display, they’re ramping up measurement and analytics. Viewthrough reporting attempts to show the value of an impression to conversions.
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  There are two key limitations: first, there is no proof that a user looked at your ad. Second, it requires that you have AdWords conversion tagging. Proceed with caution…
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• October 2, 2009 – Google Increases Advertiser Bans
  Google permanently bans advertisers “who’ve submitted multiple sites that violate our landing page quality guidelines”. A number of advertisers were excluded from AdWords in a short period of time, according to reporting by Barry Schwartz on Search Engine Land.
  .
  Some have speculated that these changes were related to Google’s introduction of product ads through product extensions (see below) and specific types of websites and landing pages. There’s no official word from Google on their blog.
  .
  This post provides a good process for appealing landing page Quality Scores.
  .
• October 29, 2009 – New AdWords Comparison Ads
  AdWords Comparison Ads launch for mortgage queries (click to enlarge). Google has offered search suggestions and other forms of query refinement options for a long time. Now, they’re extended that concept into a structured experience starting in the mortgage/refinancing industry.
  .
  The new tool features a number of options to drill down: location, home price and income to name a few. The ads only show up in a limited number of areas and advertiser participation is currently by invitation only. They haven’t shared any details of how this will develop next or what kind of reporting will be offered. If you advertise in one of these industries, I suggest you contact your sales rep for more details.
  .
  Like the changes on the local business ads, Google is pulling more of the site experience to the SERPs themselves. If your business relies heavily on these kinds of tools (Progressive, I’m looking at you), you’ll want to keep an eye on how these ad formats change. You may have to differentiate less on tools and more on content..
  .
• November 3, 2009 – Ad Sitelinks in AdWords
  Some searches will produce ads that display up to 4 additional display URLs can be shown for “for ads that meet certain quality criteria” (click to enlarge). These are similar to the sitelinks you see in organic search listings, but you can explicitly choose which landing pages and text are eligible to be displayed (up to 10).
  .
  To setup ad extensions, click on the Campaign Settings tab and go to the “Show additional links to my site” section under “Ad extensions”.
  .
  The conditions that trigger these new ads are still somewhat unclear. A few things seem to be true: it’s for ads in the preferred position (above the free results) and those with a substantially better clickthrough than other ads. This is likely to be primarily brand terms.
  .
  Like many of the other changes to AdWords, reporting features to analyze these new options aren’t yet available. I’ve heard anecdotal evidence from my conversations at SES Chicago that the links improve conversion rate. Of course, you’ll want to be mindful of how these links push down organic results and potentially cannibalize that channel..
  .
• November 11th and 24, 2009 – Product Extensions Open to All
  Product images, titles and prices from Google Merchant Center appear alongside traditional text ads (click to enlarge). This feature links Google Merchant Center (previously Google Base) to AdWords as an ad extension, similar to site links.
  .
  This is in addition to the Product Listing Ads announced earlier. Product extensions are charged on a CPC basis, while product listing ads are charged on a CPA basis. Product extensions are open to everyone, but product listing are currently in closed beta.
  .
  This is, perhaps, the most aggressive step Google has taken in their New Ads Formats Initiative (see The Future of AdWords below). According to Google’s own blog post, some companies have seen a 10% CTR increase with product extensions.
  .
  This has two practical implications. First, those extra clicks can only come from 3 places: organic listings, competitor ads, or users who wouldn’t have clicked on any ad at all. In the case of the first two, you could lose (or win) clicks, depending on where you show up on the SERP vs. yoru competitors. Given what a strong component clickthrough rate plays in Quality Score and ultimately your CPC, you want to keep an eye on it.
  .
  Second, (and this is speculation) it’s possible that the people who click on an image ad may convert better for your business than those who click on a text ad. If they can see exactly what they want before they get to your site, they may be better qualified.
  .
  The bottom line is that this is Google’s game, these ads aren’t going away anytime soon and you’ll need to run experiments to see how it works for you..
  

Here’s an alternate version of the events listed in an interactive timeline:

.

The Future of AdWords

Late in November, Google announced their “AdWords New Ad Formats Initiative” and declared “This initiative is Google’s next chapter in search advertising and over the next year it’ll be a major focus for AdWords”.

At SES Chicago, I asked Devin Sandoz, Product Marketing Manager for AdWords, about the guiding principles behind the initiative. He pointed to the evolution of organic search results, which have increasingly blended text ads with videos, images and news content.

While those changes occurred, PPC ads have largely remained text only. It’s possible that ads may not get clicked on as often.And now, they’re experimenting with videos, product extensions & location specific information to counteract the effect. For advertisers, this means you can take your existing campaign and Google will attach relevant information “when it makes sense.”

I think this is an important analogy which tips Google’s hand a bit about where AdWords is going. The evolution of the organic listings with universal search producing blended listings is likely to slowly make its way into the paid ads. Could personalized text ads be far behind? We already have session based retargeting with Broad Match (here and here).

It now means your performance has much more to do with the context of the SERP than ever before. Were you competing against product ads? Which sitelink did someone click? Are you fighting against a more robust comparison ad?

2010 is going to be a tougher year for AdWords advertisers. How are you planning to keep up?

When you finally get a paid search tool (like ClickEquations) that allows you to see each search query that people typed matched directly to the keyword you bid on and the match type you set, you’ll soon notice that all of your Exact match keywords aren’t entirely exact.

Doing a little research and experimentation while preparing for SMX, I just came across a great example of one reason why this is true.

Look at the ads to the right. Which one is not like the others?

One of our clients sells products to help Fido keep himself together, and I did some searches on that topic. Then a search for ‘Premium dog collars’. That’s the search which delivered the ads you see.

Google however remembered that not long ago I was concerned with the other end of the animal, and slipped the Poop ad into the mix.

Had I clicked it, my search query of ‘Premium dog collars’ would show up, correctly, for the exact match keyword/phrase ‘dogs eating poop’.

Just so you know.

Heading to SMX in San Jose? Come see the new version of ClickEquations at our booth, or catch me in the Quality Score or Text-Ad Testing workshops.

ClickEquations readers and customers know that we consider search queries, the words users type to initiate their search, as a vital part of paid search reporting and management.

Just yesterday our post pointed  out that keywords themselves aren’t really important, they’re just a way to attract search queries. In High Resolution PPC (our upcoming e-book) we talk a lot about using the match type, negative, bid, and other options to tune campaigns around search queries.

If they were gone, paid search would return to the dark ages.

But apparently an in-test version of Google search results makes search query tracking impossible.

Yikes.

For now, we’ll assume this is a by-product of the fact that it’s a test. It seem unimaginable that Google would take away (rather than enhance) this ability.

Hopefully someone at Google will re-assure us that search query reporting will remain. Until then, we’ll keep watching and report on any developments.

UPDATE: Found in the comments of the post referred to above, I haven’t seen the original

Here’s a comment from Matt Cutts on the issue:

“Were continually testing new interfaces and features to enhance the user experience. We are currently experimenting with a javascript enhanced result page because we believe that it may ultimately provide a faster experience for our users. At this time only a small percentage of users will see this experiment. It is not our intention to disrupt referrer tracking, and we are continuing to iterate on this project. For more information on the experiments that we run on Google search, please see: http://googleblog.blogspot.com…..-test.html.”

I didn’t believe it when I first saw the blog posts and tweets. People seemed to be reading more into a Yahoo T&C that was possible.

It just didn’t make sense that Yahoo would actually make substantial changes – new keywords, new text ads, new ad groups – in their customers accounts.

But it turns out not only was it true, but Yahoo had the nerve to come out and defend the practice.

Six months ago I wrote about the way paid search advertisers view and think about paid search engines.

Yesterday Danny Sullivan – who is not only perhaps the most knowledgeable person out there about the ways of the search engines, but also a very thoughtful and considered writer and thinker – took Yahoo to task for their behaviour.

Advertisers are not idiots, nor are they children. And they got treated that way by Google for years, denied the ability to easily opt-out of programs like AdSense For Content, if they so wanted. You couldn’t do that, because Google was steadfast that offering such options would just be too confusing for those poor little advertisers to understand. Things have gotten better, so for Yahoo to start acting like the Google of old? It’s astounding.

Yahoo should have never given itself the right to make changes this way. They should have asked advertisers if they wanted this “service,” to be more transparent and honest with them. They certainly shouldn’t have reacted with a “we’ll do what we want, you all don’t know better” post as they did.

The specific issue at hand is important, and all Yahoo advertisers should make their thoughts known to via their account reps. But the broader point is critical too – in many substantial ways these search engines don’t treat us that well.

What if your ads didn’t run?

You picked the keywords, placed the bids, people searched, but your ads didn’t show up?

It happens every day. In almost every one of your campaigns.

It’s documented in a metric called Impression Share (in Google Adwords, no MSN or Yahoo equivalent yet.)

Impression Share displays the percentage of the time that your ads were displayed to people who entered search queries which match your keywords (at their specified match types).

100 minus Impression Share is the percentage of the time your ads didn’t run when you thought they would.

If your campaigns are profitable, the missing impressions are missing profit. Who can afford missing profit these days?

Three things stand between you and this extra profit:

1. Getting your Impression Share metrics.
2. Knowing what they mean.
3. Taking the steps necessary to drive Impression Share up.

Finding Impression Share
To get an impression share report most people have to go to the Reports tab in Adwords, build a Campaign report, and edit the fields to include IS, Lost IS (Budget), Lost IS (Rank), and Exact Match IS. You can’t access these metrics at the AdGroup level (a shame we’ll decry another time).

Impression Share Options in Google Adwords Report Configuration

If you use ClickEquations, you can see Impression Share right in the Campaign reports, or in any report or dashboard built in Excel with ClickEquations Analyst.

Impression Share Metrics in ClickEquations

Understanding Impression Share
There are four Impression Share Metrics. IS, IS Budget, IS Rank, and IS Exact. The first three are relatively straight forward. The last is a bit confusing.

• Impression Share = The percentage of the time your ads where shown (for this campaign) out of the times it was eligible to be shown. Eligible means the search matched your keyword, your account was active, the geo-targeting and day-parting and other settings were right, etc.

The next two metrics explain the Impression Share you didn’t get. If your Impression Share is 70%, then your Lost Impression Share is 30%. But why didn’t your ads run those times? The next two metrics tell you:

• Lost IS (Budget) = The percentage of impressions lost due to budget constraints
• Lost IS (Rank) = The percentage of impressions lost due to low Ad Rank (cost-per-click bid x Quality Score).

So Impression Share + Lost IS (Budget) + Lost IS (Rank) = 100%. These tell you what you got and what you didn’t get, and why.

The last one is trickier. For that reason I don’t think it gets the attention it deserves. And I’ll admit that I didn’t understand it until today when I started digging into this topic while doing some analysis work.

• Exact Match IS =  The impression share of your campaigns as if your keywords were set to Exact Match. That’s the official Google definition – the one that seems generally misunderstood.

So let’s try it a different way. Exact Match IS tells you the percentage of the time when your ads were displayed for search queries that exactly match the keywords in your campaign.

One minus Exact Match IS is the percentage of the time when someone typed EXACTLY your keywords in as their search query and Google still didn’t show them your ad.

Using Impression Share
The IS metrics are great because they tell you things you could otherwise never know about your campaigns.

Foremost, they tell what you’re getting and what you’re missing in terms of impressions – and from there the calculation of missing clicks, conversions, and even revenue/profit is rather simple (see chart 2 below).

This is huge. We can finally at least partially answer the perennial question ‘How much more could I make from my paid search campaigns?’.

Start With Exact Match IS
Although it somehow seems offered as an afterthought metric, I’d recommend starting by looking at your Exact Match IS.

This simplifies the world and if you’re buying anything near the right keywords provides a sense of how you’re doing in terms of getting shown to the people looking for you.

Google Exact Match IS (Chart from ClickEquations Analyst)
(Click to enlarge)

Exact Match IS Graphed As Revenue & Click Opportunity
(Click to enlarge)

If your Exact Match IS isn’t high (as usual there’s not simple way to say what that means, but let’s go with 70% or higher) then you really need to work your way down the list and think about your keywords, bids, quality score, ad copy etc.

Think about it this way: if Google doesn’t think it’s worth their while to show your ads to people typing in exactly the keywords you’re buying, how can you expect them to think running your ads is worth it for search queries you aren’t even directly buying?

Now Look At Impression Share
Let’s assume you have good to great Exact Match IS (you worked that out over the last 90 seconds right?). Now look at regular old Impression Share.

Google Impression Share (Chart from ClickEquations Analyst)
(Click to enlarge)

Here you’re likely to see something ranging from confusion (some highs and some lows) to a real bloodbath (all lows or at least no highs).

The reason these aren’t all 98.7%? The only easy answer is if you’re lucky enough to have some %’s in the IS Lost Budget column. And I say lucky only because that column is at least definitive. You can spend more and get those impressions.

Lost IS (Rank) theoretically explains the rest, but really it doesn’t explain very much.

Rank means Ad-Rank. Ad-Rank is Bid x Quality Score. Bid can simply be an insane fee you pay despite what something is worth, you probably don’t want to ‘win’ that way. Quality Score is determined by many things, as we’ve been over.

So Impression Share provides an easy way to see something, and know something that is very important to know. But it doesn’t provide a magical simple path to improving the problems it helps you find.

End of Part I

To solve our problems we’ll have to follow the path through our campaigns.

Impression Share forces us, if we look at it hard enough, to understand the roles of both bids and quality score, to think about our match type strategies, to organize our campaigns more effectively, to include the right keywords not just the most keywords, and to broadly see how interconnected the many options really are in a paid search campaign.

We’ll dig into that work in a follow up post later this week.