September 01, 2008 | Monday

3 Major Changes to Google AdWords – How Do They Affect You?

By Joy Remuzzi  in Marketing |News |PPC |Search Engines |Google |Search Expertise |Search Technology |SEO

A recent post on the Google AdWords blogspot Inside AdWords: Quality Score heralds a rethink in the way the Quality Score is calculated. In brief. . .

1. Google will now calculate the quality score of your keywords at the time of the search query.
2. Google has replaced the “minimum bid” metric with “first page bid.”
3. Finally, Google will no longer mark search ads as “inactive for search.”

In the long term, it will be interesting to see what direction these changes take us. For now, let’s just run down the pros and cons for you, the advertiser.

Positive

• Ability to appear on more “tail terms” that previously had high minimum bids. Good news primarily for retail, travel and publishing advertisers.
  
• Better ability to forecast, since Google will be providing better transparency of the CPC required to hit Page 1 on individual keywords. Ultimately we envisage this leading to a certain element of price inflation for some keywords (see negatives below)
  
• Improved granularity of the Quality Score metric. We anticipate that the current 3 levels of Quality Score (Poor, OK and Great) will be improved to more granular score between 1 and 10.
  

Negative

• Just when brand term bidding had died down following the Trademark policy change in May, it’s all about to start up again. It appears that these changes will allow more advertisers to appear on brand terms. We’ll continue to track the effects of this via Latitude’s Brand Term Index (LBTI) (Watch this space!)
  
• Increases in bid prices for positions 5-12 as your competitors get insight into which Page 1 terms are more accessible than previously thought and nudge their Page 2 terms onto Page 1.
  
• BIG WARNING: Keep an eye on those inactive terms! If an account has a large number of “inactive” terms when the new policy takes effect you could find spend rising dramatically and you could do serious damage to your daily budgets.
  

These changes just confirm the dynamic nature of search engine marketing – and we’ll be here to help you understand and navigate these changes to your best advantage.

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