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Reading A Little Less Into It
By Cameron Ferroni | March 11, 2008
This is a follow-on to Teri Foley’s excellent article from last week regarding the recent brouhaha around Comscore and Google. As more information has been released, and more analysis has been done, there have been a couple more highly credible theories posted. In particular, Comscore itself has argued that the dropoff in clicks might actually be a good thing for both advertisers and Google.
The upshot is a follow-on to Teri’s comments that “less clicks means more opportunity for advertisers.” In this case, the specific effect is that Google has likely implemented another round of “click quality” changes. What this means is that Google won’t just show any old ad on a page, they determine, through some highly sophisticated black box methods, whether or not they believe that an ad is relevant to the content of the page, and subsequently, whether or not they will show that ad, and/or how much they will charge for that ad.
Confused yet? Consider the following. Let’s assume that you were doing a search on Google for seattle car repairs. A highly “relevant” ad would obviously be an ad for a car repair shop in Seattle. Now, a less relevant ad might be an ad for a specific car dealer in Seattle - still relevant, but only relevant if you happen to drive a Toyota and it’s a Toyota dealer. A very low relevancy ad would be if it was an ad for buying cars from an online car sales shop. Now, Google has a few different ways of deciding how these ads will be displayed. Under the old “auction” model, the engine would just take all three of these, and whoever put in the highest bid would get slot one, next highest would get slot two, and the third highest would get slot three. No concept of relevancy, just pure capitalism. Unfortunately, that doesn’t actually end up working well for anyone - the customer doesn’t like it because the ads aren’t relevant, the advertiser isn’t happy because they are paying for clicks that aren’t generating leads, and Google - well, Google makes money no matter what, but if customers and advertisers get frustrated, well, they stop paying.
As a result, Google introduced the concept of relevancy. Now, rather than just having the highest bidder get the top slot, they look at things like the destination website, the ad text, the price bid, and the historical click throughs for the ad, and determine how to best maximize customer, advertiser, and Google value in order to determine where to place the ad.
How does this impact the number of clicks? Well, as Google gets better and better at doing relevancy, this should end up in people clicking less on ads - basically if the first ad they click on satisfies their needs, then why click on more ads? In addition, by placing fewer, more relevant ads on a given page, Google again is more likely to drive people to the right content on the first try. If they succeed at this, then over time, two things should happen. First, more people will click on ads since they have more value to the consumer. Second, advertisers will likely spend more per ad, since they know they are getting higher quality leads, and they don’t have to balance their spend across less relevant users!
Taken through this lens, this can be seen as a real win, not just for Google, but for everyone.
Topics: Local Advertisers, Local Search, PPClick, Advertising |