OneSearch

Google has changed how they compute Quality Score.

Here are the basic changes from an article that I read about it:

• Quality Score is no longer keyword static, but instead it will vary by user query, geotargeting, etc.

• The “inactive for search” distinction has now gone away. Now every ad that is not paused has the chance to be served, even if in practice low-quality score, low-bid ads never will have the chance

• The “minimum bid” metric has been replaced by the “First page bid” metric

This is what Google had to say about changing “minimum bid” to “first page bid”:

“We’re replacing minimum bids with a new, more meaningful metric: first page bids. First page bids are an estimate of the bid it would take for your ad to reach the first page of search results on Google web search. They’re based on the exact match version of the keyword, the ad’s Quality Score, and current advertiser competition on that keyword. Based on your feedback, we learned that knowing your minimum bid wasn’t always helpful in getting the ad placement you wanted, so we hope that first page bids will give you better guidance on how to achieve your advertising goals.”

Many advertisers will definitely find the first-page-bid (FPB) metric much more helpful than the minimum-bid metric. First Page Bid also helps to encourage positional bidding.

The outcome of all this means that first page bids will escalate the bidding wars—since there are more advertisers wanting the page location than there are page 1 slots available.

The impact is not a huge one, as most major advertisers who are competing on high-cost high-volume “head” keywords have a sense of the bidding landscape, and they also have a pretty good sense of the approximate cost of various ranges on the page. Increasing the emphasis on B2P will most likely drive some modest increases on prices for the “tail” term clicks, as scores of smaller advertisers turn to FPB for help and guidance.

The article states that focusing too much on your competitors leads to irrational bidding. We can’t assume that our competitors have the same goals or budgets as we do, and as PPC advertisers, we need to be aware of this. We can’t even assume that our competitors are bidding rationally in certain keyword verticals. Blindly following competitors’ bids can lead you off the cliff.

So, advertisers have a choice to face:

1. Bid your keywords to position—and let the economics work out how they will (“Staying on page one is quite expensive, and we’re losing money there”),
or

2. Bid your keywords to economics–and let the positions work out how they will (“We don’t want to lose money on keyword “X” and so we can’t afford to be listed on page one.”)

Interesting stuff to think about….