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.