Thursday, August 16, 2007

Google's Ad Placement Formula - Big Payoff

I noticed the email last week about Google's new ad placement formula. In its simpliest terms: A new threshhold will be considered for moving ads to the top of the page. It will include the max cpc as part of the algorithm, but not charge anymore.

The net of this is that if everyone goes and increases their max CPC bids to try and get to the top of the page, then everyone pays more because all of the bids increase. I am normally a huge fan of whatever Google does, but this change stinks. All it does is give a theoretical reason for advertisers to spend even more with less return (if the click cost increases) right before the holiday season.

MediaPost picked up an article that explains why this is good for Google's stock. At $500+ per share, the stock is fine. Google does give back in many other ways - free Google Analytics, free Google Checkout. This change only has the opportunity to raise the keyword bids without any added value.

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