5 things I learned about Google Adwords
July 14th, 2009
I just read a really insightful article in Wired called Secret of Googlenomics. Here are 5 things I learned:
1. The key component of which ads get shown more on Google is the Quality Score. This is based on a bunch of factors, but the key one is the CTR. This means ads that each ad has a "trial period", and after that if it has a low CTR it just won't get shown very much anymore.
2. Google puts a minimum bid on ads with low quality scores. This means that rather than show bad ads when they are out of inventory for good ads, they show NOTHING. Ballsy! But important, as it's what makes everyone think Google Ads are quality and targeted.
3. Google used to have a real live sales force, which was largely replaced by Adwords and the auction algorithm. It seems to me that the role ad sales plays in media companies today is moving more and more upstream - focusing less on selling the client, and more on helping them undertand, analyze, and improve their ad campaigns.
4. Google has developed their ad auctions into an economic science, and they hire people to do both economics and statistics. They have "one statistician for every 100 computer scientists".
5. Google thinks the auction model can help other industries. I fully believe this - it's variable pricing in it's extreme. Only a very mature market has a true stable price exactly matching supply and demand. Most markets however have significant fluctuation - something only a sophisticated software bidding platform could solve. Imagine if you went to a bookstore and books were priced based on demand instead of a flat rate made up by it's publisher. Twilight would still cost a lot - but book's in lesser demand might be closer to the true cost of the book - and thus might sell more.
1. The key component of which ads get shown more on Google is the Quality Score. This is based on a bunch of factors, but the key one is the CTR. This means ads that each ad has a "trial period", and after that if it has a low CTR it just won't get shown very much anymore.
2. Google puts a minimum bid on ads with low quality scores. This means that rather than show bad ads when they are out of inventory for good ads, they show NOTHING. Ballsy! But important, as it's what makes everyone think Google Ads are quality and targeted.
3. Google used to have a real live sales force, which was largely replaced by Adwords and the auction algorithm. It seems to me that the role ad sales plays in media companies today is moving more and more upstream - focusing less on selling the client, and more on helping them undertand, analyze, and improve their ad campaigns.
4. Google has developed their ad auctions into an economic science, and they hire people to do both economics and statistics. They have "one statistician for every 100 computer scientists".
5. Google thinks the auction model can help other industries. I fully believe this - it's variable pricing in it's extreme. Only a very mature market has a true stable price exactly matching supply and demand. Most markets however have significant fluctuation - something only a sophisticated software bidding platform could solve. Imagine if you went to a bookstore and books were priced based on demand instead of a flat rate made up by it's publisher. Twilight would still cost a lot - but book's in lesser demand might be closer to the true cost of the book - and thus might sell more.
1 Response to “5 things I learned about Google Adwords”
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July 15th, 2009 at 07:09 PM Great summary, Otis. I spoke to a lady at Adwords recently and she told me the same thing, they rather show no ads. Quite a challenge to get a good quality score. If you mess up, they penalize you and you have to close your account and open a new one to start fresh.