Wednesday, April 6, 2011
By Dinesh Ravishanker
by Dinesh Ravishanker A lot has been said about the value of position preference in Adwords. Our Marketing Director (Kim) and I have differences in opinion of the value of Google’s position preference feature for search campaigns. I think it’s important, and she doesn’t. For those that don't know, this feature allows advertisers to set a display range for ad positions on the Google search results page. For example, if you were to search for “Mass SMS Text Messaging”, you may see this: automated rules” - a feature that does a lot, but is most often advertised as a tool to increase bids automatically. Google hasn’t stated what percentage of users are likely to see an increase in campaign spend, but I'm hopeful that our conversions will increase regardless, as Google's Chief Economist, Hal Varian, expects. So why would GOOG remove the feature? After all, changing a user’s experience usually makes for angry users. And who worse to make angry than online marketers? My guess is that this change had two drivers: simplicity and profitability. By disallowing position preference, Google’s algorithm is increasingly simple - your ad shows wherever its bid takes it. Reducing algorithm complexity could be a competitive advantage and can inexplicably create greater efficiencies. The second driver, as is for most public companies, is profitability. This announcement came shorty after Q1’s end. And since Google must please its shareholders, my hunch is that Google's Chief Economist, Hal Varian, had the luxury of running advanced statistical modeling and some fancy regression testing to determine that killing this feature would have an immense impact on Google's bottom line. I’m guessing Google’s Q2 2011 earnings will show serious growth. Google’s stock price jumped a tad after the announcement, but nothing noteworthy as of yet. here's how) These guys let you make bid & budget changes to keywords (and ad groups / campaigns) based on observed position. The down side - oftentimes this will automatically increase your bids and many advertisers will not set up these campaigns correctly which will allow bids to rise to the next default maximum bid cap. (I have many campaigns for which this is a non-optimal solution and I'd be paying much more than I'd previously be willing.) c) Don’t do anything. Ignorance is bliss, right? Just pretend the feature never existed in the first place and make the best of it. I suspect many advertisers won’t update their campaigns - which will end up costing advertisers incrementally more. But assuming Hal’s right, you will increase your overall conversion rate. We support Google’s changes for now but I’ll report back with our campaign expenditure results in the coming months. References: Inside Adwords blog: Adwords position preference feature is being retired. Adwords help: How can I target average positions without position preference? Inside Adwords blog: Understanding the Average Position metric. SearchEngineLand: Google shuts down position preference for Adwords bidding. Inside Adwords blog: Automated rules now available to all advertisers.