Channelone.TV: Important change to Google’s ad rank formula

Friday, November 1, 2013

Important change to Google’s ad rank formula

Psyche your business for a kick-ass 2014 - 4-Man Intensive December 16-17 http://www.perrymarshall.com/roundtable/4-man-intensive/

Mel,

This matters, so pay attention. Google has hung a big juicy carrot at the end of the AdWords stick.

For years Google’s formula has been:

Position = Quality Score x Bid Price. Where two thirds of Quality Score is Click Thru Rate.

What’s new is, Ad Extensions are the tie breakers. If two ads are close, the winner is going to be the one that makes best use of Ad Extensions.

None of this matters if people can’t see your ad extensions. They only see those in the premium space, the top three positions in AdWords.

This means - if you’re not grooming your ads for the top 3 spots, you’re not in the game.

Ad Extensions push the organic results lower on the page and drive more revenue for Google.

This means you need to be testing your extensions and getting enough exposure to appear in the top 3. Otherwise, Google doesn’t consider you a player.

Everything Google does makes sense if you understand 80/20. 80/20 says: Reward your best advertisers by offering even more tempting carrots on the end of the stick.

This article by Wordstream expounds on the implications of this:

http://www.wordstream.com/blog/ws/2013/10/24/adwords-ad-rank-algorithm

My opinion on what Google is doing:

The success rate of Google advertisers used to be 80/20; now it’s 90/10. 10% of the advertisers get 90% of the clicks. Google is less and less interested in the positions running down the right side and more interested in rewarding the top 3 spots.

They are even experimenting with large banner ads at the top of search results.

What this tells me is, Google is ALL about money now. They are not about mission. They are not about sticking to their original objectives or identity.

They are whoring themselves out to the almighty dollar. Which of course is what public companies always do. Now they have every right to do this, but I also believe this is hurting them.

It is hurting them in the long run because a Google search offers you fewer interesting options than it used to. Many times there are no results on the right side, only the top 3. They are just driving you towards the top players.

I don’t think many people appreciate how many businesses and industries now exist solely because a very large search engine exists that sells advertising. The very phenomenon of AdWords and things like it is the highest kind of economic alchemy. It is the very thing that makes recessions go away and creates economic booms.

What made Google great originally was the diversity of offerings. Insiders tell me, for example, that when Google started slapping down advertisers with Quality Score stipulations, their SEARCH volume started going down! In other words people were subconsciously expecting to find less interesting things to buy on Google.

This degradation happens to all large companies, unfortunately. Law of large numbers.

But anyway, regardless of my idealism or the “should be” world, the IS world is that you gotta be one of the top 10% players, or you ain’t playing. This means *winners win bigger* and losers lose faster.

If you’re on top of your game, you get A HUGE AMOUNT OF TRAFFIC. I just talked to a guy the other day who sells a particular kind of medical device. He’s top dog in his market and he’s just minting money.

I’m telling you, being #1 in your market has never been more profitable. Recession or not.

Dominate your market. And sleep with one eye open.

Perry Marshall

Dramatically improve your business in 48 hours. December 16-17 in Chicago http://www.perrymarshall.com/roundtable/4-man-intensive/