1. Quality elements in paid search bidding: a third-generation auction Andrew Goodman Page Zero Media

2. SES Chicago Dec. 2006 – Day 1 2 Three generations of paid search ad ranking (1) GoTo.com / Overture model: pure bid-for- placement – Variation 1: AdWords 1.0, CPM-based, fixed – Variation 2: Overture folds in “click index” (2) AdWords 2.0: Max Bid X CTR – Various approaches to CTR “cutoffs” and other factors (3) AdWords 2.5, 2.6: Quality-Based Bidding – Yahoo’s version coming soon, too

3. SES Chicago Dec. 2006 – Day 1 3 This session may mean very little to you if… You have high QS across the board (this is normal) In this ad group, 9 of 428 keywords were deactivated. As it turns out… 8 of 9 were being bid at.01, and the min bid is.03 The only “rotten result” was for the keyword “yahtzee” – for some reason min bid is.30 This is a normal, granular, relevant campaign

4. SES Chicago Dec. 2006 – Day 1 4 How it Works Two Quality Scores – One affects minimum bid (keyword status) – One affects ad rank

5. SES Chicago Dec. 2006 – Day 1 5 QS and keyword status Predictive or historical CTR “Other relevancy factors” – Tightness of relationship keyword – ad – landing page ***Landing page and site quality*** Types of keywords? Editorial policies? Result of low QS: high min. bid

6. SES Chicago Dec. 2006 – Day 1 6 How it looks to have low QS

7. SES Chicago Dec. 2006 – Day 1 7 If you fix it, it won’t necessarily activate (changed destination URL’s to be more granular)

8. SES Chicago Dec. 2006 – Day 1 8 How it Works: Landing Page and Site Quality Assessments See Google’s guidelines Human coders used to train algorithm Principles for ad quality raters are derived from user feedback on a large scale Yes, Virginia, “arbitrage makes up a high proportion of the complaints we receive” AdsBot crawls landing pages looking for “markers” – a formula will determine likelihood of poor user experience etc.

9. SES Chicago Dec. 2006 – Day 1 9 QS and Ad Rank – CTR’s still key CTR and Max Bid still predominant Other factors? How important? Unclear Landing Page Quality not used here Position based mainly on bid + CTR CTR is still normalized for ad position

10. SES Chicago Dec. 2006 – Day 1 10 Which does lead us to the next question… Is Google really targeting arbitrage, or not? Just look at all those eBay ads etc… (we’ll get to that answer shortly)….

11. SES Chicago Dec. 2006 – Day 1 11 […and don’t even get me started on the quality of the organic SERP’s]

12. SES Chicago Dec. 2006 – Day 1 12 Case #1: Fix What’s Broken Advertiser (a sports training facility) using separate page to test response on different domain AdsBot clearly believes this is a spammy, shifty site – No business info disclosure – Looks like a templated “come-on” page – An orphan page, no conventional navigation Solution: simply revert to original domain which has a similar landing page with full disclosure & conventional navigation; If necessary alert Google to the change

13. SES Chicago Dec. 2006 – Day 1 13 Case #2: Don’t Be Stoopid Advertiser X panics with low quality score – Cranks up bids to $100 – Ponders landing page design in minute detail – Finally admits, a popup was to blame – And the popup said… “next time you come back to the site, don’t use a search engine… each click costs us money!”

14. SES Chicago Dec. 2006 – Day 1 14 Case #3: Cheesy Landing Pages + Deceptive Offers – “There is No Sanctuary” AdsBot flags offer as being unrelated to keywords Editorial review confirms this Company is well known in “data collection” Google hates “data collection” Google is a leader in “data collection” Solution? Really there is no quick fix if you’re substantively at odds with Google; it’s an editorial issue and your account is flagged Consider a long term plan to rebuild the business model around original content and a genuinely interested audience (permission marketing)

15. SES Chicago Dec. 2006 – Day 1 15 ???? Panama ???? – Will roughly follow suit

16. SES Chicago Dec. 2006 – Day 1 16 Interesting Trivia Google may relax minimum bid amounts: – “In countries where market is less mature” – In various countries, for other reasons Upshot is, study global opportunities

17. SES Chicago Dec. 2006 – Day 1 17 Arbitrage vs. Garbitrage: Compare this landing page…

18. SES Chicago Dec. 2006 – Day 1 18 Or this popular restaurant review destination…

19. SES Chicago Dec. 2006 – Day 1 19 With the world’s most indispensable resource on… er… Overture links to ads about jelly beans.

20. SES Chicago Dec. 2006 – Day 1 20 Who’s to say what quality is? Is Google acting arbitrarily? Or are users providing feedback? Users seek real content or real shopping, not another page of links. Search engine results and ad results quality dictate repeat usage of search engines; search engines must protect their real estate

21. SES Chicago Dec. 2006 – Day 1 21 User behavior & response can be measured over time “Although paid search and Google Search operate independently, Google’s thinking about quality is by no means siloed” – Nick Fox, Product Manager, Ads Quality, Google

22. Happy holidays! Andrew Goodman Page Zero Media