More than just a bid
How Google sets advertisement prices
http://googleblog.blogspot.com/2008/05/how-auctions-set-ad-prices.html
to learn more about QualityScore visit
http://adwords.google.com/support/aw/bin/answer.py?hl=en&query=quality+score&answer=10215&type=f
Interesting bid simulator
http://www.webpronews.com/google-talks-future-of-search-advertising-2009-08
In class, we learned about various ways that the search engines set their advertisement prices. Although these concepts are very important fundamental concepts, in real life, we need to look further down than these topics. Especially to understand successful companies like Google, we must grasp various methods they use to approach their clients.
Google’s system looks beyond bid prices and revenues. For example, one may earn the top slot of the advertisement and not pay more than the second advertiser who earn the second slot. With the algorithms that we learned, we got outcomes in which the highest bidders always take the best spots because they are willing and able to outbid the other bidders. However, Google also takes into account of QualityScores. QualityScores is an indicator set by Google that tells them how relevant the ads were to the user’s query, and how many times users found it useful and clicked on them. So by observing these data and the click through rate, Google sets another indicator on top of bids that would rank the advertisements in the most optimal order. In other words, Google rewards you for providing positive experience to your products. This further enhances user’s experience even with the possibility of lower revenue for Google.
Another interesting article that I came upon was about the bid simulator that the company introduced. This yet is another feature that Google made largely for the sake of their advertisers rather than themselves. The simulator allows the advertisers to see how much approximate clicks that they would get based on their bid prices and Price-Per-Click that they would have to pay; in addition, it also provides an approximate info on how much more clicks they would get with a higher bid or less with a lower bid. In this sense, Google does its best to help their advertisers bid their true values or some other values that they want- they can compare various different prices. This significantly lowers the risk of their advertisers and really helps them get the right degree of service that they want.
As a leading search engine, Google did not fail to think in their advertiser’s and user’s shoes and try to enhance their experience. It is a no-brainer why Google is such a successful and a leader in this field. In this sense, although the knowledge we learned in class were good fundamentals in a way that it helps us understand and have voice in issues like this better, it is clear that there are certainly more to it. It is certainly rewarding to figure out more in-depth about these particular issues that we learn in class to really help us get a clear grasp of human networks around us.
Most people who start with AdWords don’t understand that the bidding changes every day or even hour depending on the industry. Take airline tickets for example. They have to adjust bids all the time depending on how many seats they need to fill. There are lots of tools to help people manage bids for hundreds, thousands and even millions of keywords. For people just starting off they usually just start with a price and keep it at that. Bid management is an on-going process that people using adwords need to understand.
-Spencer