Here’s an interesting thought: advertisers and publishers working together to feature the most relevant ads to the user rather than focusing on the spiraling cost curve to drive internet advertising. Wouldn’t that result in a dramatic decrease in the us-versus-them mentality plaguing all facets of the advertising industry in connecting with customers? The gang at Google seems to think so, with their latest announcement today about shifting to a "quality-based minimum bid" model:
Soon, each keyword will be assigned a minimum bid based on its Quality Score. Keywords with a higher Quality Score will be given lower minimum bids to stay active and trigger ads. Keywords with a lower Quality Score (including those that are currently on hold) will have the opportunity to run if your keyword or Ad Group’s maximum cost-per-click (CPC) meets the minimum bid. (From Google Announcement Email)
The pay-per-click model has been a godsend to help interactive marketing quantify itself in a way no other medium can match. After all, who else can make the claim that you only pay for clickthroughs – while impressions are served for free? Just as Priceline presented a revolution in sales theory with their "seller-sets-price-for-buyer" model; this new model from Google presents a similar leap. They are actually basing the price advertisers pay on the quality of the ad! Ok, not creative quality – after all, we are talking about text ads … but based on click through rates,they will determine which ads are more relevant (a proxy for quality), and base their ranking on a combination of relevance and max CPC set by the advertiser. Does this mean that some advertisers will pay less for their most important keywords? Possibly – but it definitely means every small advertiser will have more of a shot at relevant keywords than someone who has deeper pockets, but ultimately lesser relevance. Talk about giving the little guys a fair shake. Just another example of Google’s corporate culture that carries through to their business offerings.
Rohit, it makes better sense now. Now we need to see how effectively the scores are being measured and relevant bids are being calculated with this change. I respect their decision of lowering the bid to allow the David to hit face-to-face with the Goliaths.