When Google introduced the concept of a minimum bid into the Adwords platform, I guess few advertisers and perhaps not even Google realized the effect it would have on their business.

Publicly, Google always maintains that relevance and user experience take priority over revenue generation and so the minimum bid was introduced to ensure that search engine users would not be bombarded with poor quality advertising. By raising the bar, Google forced advertisers to reconsider the ROI of their Adwords campaigns rather than spam the search results with ads by bidding en masse on cheap, non-commercial keywords in the hope of getting a few extra clicks.

Noble as the minimum was intended to be, most Adwords advertisers will be able to tell tales of being ‘slapped’ with minimum bids of up to $10 per click. Needless to say that very few businesses would be able to pay those prices and Google was never very forthcoming with a helpful explanation in order to lower them again.

On a bigger scale, the minimum bid also completely negated Google’s argument that it does not behave as a monopoly in the search engine advertising market. By setting a bottom, the free market auction for keywords becomes a whole lot less free and Google theoretically can tweak the minimum bids to squeeze the most out of its advertisers and boost its revenue. That is a factor the company cannot ignore as it keeps increasing market share and attracts ever greater scrutiny from governments and competitors.

By abandoning the minimum bid for a ‘first page’ bid Google hopefully will introduce again greater transparency into its advertising platform. More practically, Google’s move will reactivate a sizeable portion of ad inventory that currently sits dormant on its platform and give the company a boost in revenue in time for the upcoming holiday season.

So although as an advertiser we welcome the perishing of the opaque minimum bid, we will be keeping a close eye on our costs as a mass of previously inactive keywords comes back online.

At SMX advanced in Seattle the question was put to the attendees: “how many of you use bid management tools?”

And that was the most surprising part of the session: nearly everyone in a room with hundreds of people raised their hand. Of course technically speaking using Excel to increase your prices by 10% also makes it a bid management tool. Nevertheless people in the industry seem to take bid management really seriously - as they should. I couldn’t help shake the feeling though that the panelists conveniently touted all the wonders of bid management without touching on its many shortcomings. Only David Rodnitzky from PPCAdBuying.com played the devil’s advocate and warned against the dangers of being sold an expensive, complex system that may not actually offer a return on investment.

I have to agree with David that bid management tools often over-promise and under-deliver and for a very simple reason. bid management makes sense for large PPC campaigns where it is unwieldy to set prices manually. But it is exactly for those large campaigns that the data you have available for each keyword is very sparse. Long tail keywords may contribute a significant portion of your revenue but by their very nature each individual keyword gathers information in a fairly random manner. No matter how smart your bid management system, it cannot make assumptions from data that doesn’t exist. To get around that most system group long tail keywords in clusters and aggregate their data. How you cluster the data though will greatly influence of the system and as far as I know there is no one optimal way of doing it.

A comment made by search marketing veteran Kevin Lee (and with which other panelist Chris Zaharias from Omniture agrees in spirit) also illustrates another difficulty faced by automated bid management. Kevin said that half of the paid ads in top positions are put there by idiots, not rational beings. How would a bid management system incorporate the behaviour of an irrational market into its decision making algorithm?

When choosing a bid management system be careful not to over-complicate things. For small to midsized campaigns you probably don’t need any fancy systems. Choose a tool that is flexible and that lets you override its bid adjustments. That way you can control for events such as special promotions or sudden increased competition in the market. And remember, bid management tools are only an aid, not a solution.

Finally. That was my first thought when Microsoft announced the existence of an MSN Adcenter desktop tool at the SMX advanced conference this morning. We knew something like this was in the pipeline but never knew when it was supposed to become publicly available. Well now it is, almost. The tool will initially only be launched in a private beta so you better apply quickly if, like me, you dread working with the Adcenter web interface. In combination with with the other initiatives MSN has taken recently, such as their cash-back program and the deal to pre-install Live Search on all new HP computers, today’s announcement sends a strong message that Microsoft is determined to go after Google head on.

Google dominates the PPC market not just because it has the most users, but for a large part because it is so easy to advertise on its Adwords platform. But many advertisers don’t like Google’s grip on the market and are just waiting for an opportunity to move a larger part of their budget to alternative search engines. Hopefully Microsoft’s tool will facilitate this.

update: you can signup for the adcenter beta here  

Some merchants are still not convinced that they should be bidding on their own brand keywords when running a PPC campaign. I believe they should, but don’t take my word for it, take Google’s. When searching recently for some of Google’s applications, i noticed the following ad:

One could argue that it doesn’t cost Google anything to advertise on its own site but there is still an opportunity cost involved in not having someone else’s ad displayed there. Yet Google obviously thinks it is worth it because the ad stands out a lot more than the organic listing and they are able to control the message they convey to the user a lot better. When you are looking for a place to download Google talk, which link would you prefer?

If you are running PPC campaigns in the UK or Ireland and you’re a believer in open markets and healthy competition, you will love Google’s AdWords Trademark Policy Revision. However, as with most of Google’s recent changes, it will cost you.

The changes are nothing new to US advertisers, as Google has been allowing advertisers to bid on their competitor’s US trademarks since 2004 but the UK market up till now has enjoyed more protection.

Advertisers unsure how this will affect their PPC campaign can read up on a previous post on brand bidding but basically i foresee the following impact:

•  ’small’ companies will use this opportunity to aggressively start bidding on their competitors’ trademark in an attempt to gain market share
•  dominant advertisers will have to spend more money to defend their brand from their rivals.

The stronger your brand, the more you will be (negatively) affected by this change as well known trademarks are a big driver of traffic and others are going to want a piece of it. This is a time for UK advertisers to evaluate their PPC campaigns and their brand bidding policies. They last thing you want be is unprepared when the changes come into effect on May 5 2008.

And Google? They benefit because in all likelihood advertisers will spend more money on Adwords (although the official line is that they’re are just doing it for the sake of improving ‘relevancy’ to the user).

Since the introduction of Adwords, Google has been rolling out new features regularly. Most of the time, these additions were aimed at helping advertisers to create more targeted and relevant advertising campaigns. Even though the introduction of the Quality Score (QS) algorithm and the associated introduction of minimum bid prices boosted Google’s revenue, the underlying principle was that it would weed out irrelevant ads from the Adwords system.

Last week however it emerged that Google is beta testing a feature called ‘Automatic Matching’. What this will do is match your ads to keywords you’re not actually bidding on but which Google deems relevant to your campaign, in order to ensure that your monthly budget limits are reached.

Some analysts see this feature as a sign that Google is feeling the pressure of Wall Street and is (desperately) looking to maintain its revenue growth.

As an Adwords professional I do know that this feature offers no benefit at all to a knowledgeable advertiser although there are three parties which could potentially benefit from it.

1. Google: there is no denying that Google will increase its revenue implementing this feature. Most advertisers set their budget above what they actually expect to spend to ensure that their campaigns are sufficiently buffered and don’t run out of money during the month. What Google is proposing is creaming off that surplus budget.
2. Corporate advertisers: Not all search engine advertising is ROI based, an increasing portion of spend is dedicated to branding. This is mainly the case for large corporates who can afford not to generate direct revenue from online marketing. Automatic Broad Matching allows them to spend their money without the hassle of running a large PPC campaign.
3. Advertising agencies: For agencies that charge their clients a percentage of spend, Automatic Broad Matching offers the same benefits as it does to corporate advertisers. It enables them to spend more of their clients’ money (and increase their revenue) without the additional effort of running a large campaign, just sit back and let Google do the work for you.

Would I ever use this feature (luckily you can opt-out)? Definitely not.

As a company, we believe in adding value for our clients and based upon years of experience, we are of the opinion that running a campaign using large scale broad matching is not the way to go about it. Not only because broad matches are a poor indicator of a user’s intent and often have a poor ROI but also because you lose control over your marketing campaign. Even when you’re only interested in branding, you should be concerned about which keywords trigger your ads. Having seen Google’s broad matching in action, I would say it is far from perfect and not always in the advertiser’s best interest.

Search engine advertising is increasingly becoming more complex and competitive. All the more reason to take charge of how and where to spend your budget and not to rely on the ‘easy’ options being offered by parties who are incentivized to increase your costs.

So your ad is sitting on position 1 on Google, and you get a reasonable amount of clicks a day. Your ROI is excellent and you think you have optimized your campaign to it’s full potential… You may also be mistaken.

One of the metrics in the Google Adwords reports that is often overlooked by search engine marketers is impression share. Impression share is basically your campaign’s market share of all the impressions it is eligible for. If you are bidding on the word ‘widget’ you would ideally like your ad to be shown every time a user searches Google for this term. Many people will be surprised to hear that this is not the case, not even if your ad is normally in the top position.

Here’s why: every time a user enters a search queries, Google executes an auction to determine which ads should be shown. As your competitors come and go, and alter their bid prices, your ad does not always win this auction. Sure, on average you might be doing OK but most likely you don’t win every auction.

According to the Google reports, there are two reason why you might not reach your maximum impression share. Firstly, if your daily budget is too low, Google will exclude you from certain auctions in order not to exceed your budget. In the other case, you lose the auction because your ad rank is too low.

Google defines ad rank as the product of Quality Score (QS) and your max CPC so increasing either of these two factors will increase your ad rank. Unfortunately, Google only reports on impression share on a campaign level, so you need to structure your campaigns cleverly to make optimal use of this data. For instance putting all your trademarked keywords in a seperate campaign will help you to determine how often your ads are shown when someone searches for your brand (ideally, this should be 100% of the time).

The easiest way to increase your impression share is to increase your max CPC. Increasing your bid prices doesn’t mean that your effective CPCs will increase, especially not if you’re already occupying the number 1 position. It does definitely increase your risk though, as a determined competitor could send your CPCs soaring. And it definitely will increase your total costs as you will gain more impressions and more clicks. But as long as your are generating profit from your increased traffic, it makes sense to try and grow your impression share.

Obviously obtaining a 100 percent impression share is unlikely to be a viable goal. But looking at this metric will give you a good idea of the size of your potential market and your position in it.

The whole idea behind a negative match is to cut out irrelevant impressions, and possible clicks, on your advertisements. Irrelevant clicks are similar to unwanted customers, or even shoplifters coming to your store. Of course, if you’re running a large campaign thats generating a lot of traffic, it becomes difficult to monitor your traffic.

This brings me to my principle argument. Negative matching is not always a helpful procedure, and in fact, if done wrong will ultimately be damaging to your campaign bottom line. For instance, if I’m selling goods for a merchant who sells organic products, but does not stock pumpkin seeds, I will most likely have to use negative matching for certain keywords. I’ve structured my account in such a way that I have made one campaign for organic skin products, and another for various organic food products. Now to the negative matching. Instead of running negative matches on [pumpkin seeds], [cheap pumpkin seeds], and [what are pumpkin seeds], I simply need to broad match the negative keyword ‘pumpkin’ on a campaign level.

The more complex negative matching happens when you have conflicting keywords in similar campaigns. For instance, your food campaign contains different brands of poppy seeds, as well as various brands of sunflower seeds. ‘Organix’ has both types of seeds, while ‘Natures Way’ has only sunflower seeds. Broad negative matching on a campaign level, for either the brand, or product in this case creates a problem. In this situation negative matching should ideally be done on an ad group level, using broad match types.

For a campaign with 100 000 keywords though, where the merchant has a vast product line, this process is very time consuming. The ideal is that you want to cover the long tail of negative matches, giving you a high CTR, with relevant copy, and a great landing page for every keyword you’re running, but more often than not, the time requirements of these bigger campaigns do not allow for this. If you don’t have the time for group level negative matching, then the second best thing is to look at your high density and high traffic keywords…either before or after the campaign has launched.

If it’s before the campaign launch, you can use Google’s traffic estimator tool (allows for bulk operations), and then run your high traffic keywords through the keyword tool. In this case you can do some head negative matching pretty quickly for all your high traffic terms.

If you want to do negative matching afterwards, take your existing information on your high impression keywords as a pointer of where the work needs to be done.

Lastly, with regards to negative matching for newly generated keywords. Personally, I feel that instead of exact negative matching all keyword terms that are irrelevant, I would firstly look for patterns in your irrelevant keywords that you could generate strong broad negative matches for. This will get to the root of the word, and avoid any possible misspellings/variations that could come up the next time you do new keyword research. By simply running exact negative matches, you are not accounting for the sheer amount of semantic variation that Google has to deal with on a day to day basis.

Any other thoughts on improving your CTR through negative matching?

Over the past few weeks we have been spending extra attention to the evil beast of PPC advertising: click fraud. During the holiday rush it is easy to miss suspicious traffic since the ‘normal’ campaign metrics no longer apply. Traffic soars, adcopy needs to be updated to reflect the latest offers, items go in or out of stock, seasonal and holiday related keywords come and go. All this within the space of a few weeks.

There were two main reasons to really scrutinize our traffic for fraudulent clicks at this time of the year:

1. To offset the increased risk of click fraud during the peak retail season.
2. To see if Google’s assertion that they catch most invalid clicks holds true when traffic volumes spike.

We looked at mountains of data from our campaigns and created experiments to test the robustness of our own monitoring systems and Google’s filters. In general, we found that both performed really well although one can never assert with 100% probably whether or not a click is fraudulent (the best you’d come to certainty is when it converts into a sale).

We learned a lot from this exercise and decided to update our click fraud risk calculator based on our findings. This calculator does not tell you what percentage of your traffic is fraudulent. Google already does an excellent job at that if you’re not using your own (or third-party) monitoring systems. What it does do is assess the risk profile of your PPC campaign so you can take appropriate measures to mitigate this risk.

Hopefully you will find our little tool very useful and if you are interested in a more in-depth analysis of the intricacies of click fraud, have a look at this Google click fraud presentation, or read more about our findings here.

In a previous post I explained why companies should use their brand name in their PPC campaigns. In short, you should be doing this because it can be a source of cheap traffic and because you need to ensure that your competitors do not take up the prominent top PPC listing when people search for your brand. That said, who should you trust to do your brand bidding for you?

Traditionally, brand management has been the domain of offline advertising agencies. But from what our company has seen so far, these agencies are terrible at running a decent PPC campaign. They offer it to their clients because they want to ‘own’ a client and offer him a full range of marketing services. But in general what the client gets in return is not good value for money. Agencies will run a PPC campaign on a few broad keywords, including brand names, and will generate a probably decent amount of traffic but for a sizeable management fee, usually a percentage of advertising spend.

Based upon data from campaigns that we run for our clients, between 40% and 60% of search traffic is generated by a client’s brand name. So running a PPC campaign just based on a few keywords is feasible if you have a well known brand but you lose out on a large portion of potential traffic if that is all you do.

The question is, should you be paying your agency a lot of money to run a small brand based PPC campaign? Probably not.

An alternative option is to let affiliates use your brand name in their campaigns. But If you only have a few affiliates, they will also behave like an agency and just run a small campaign based on your brand name. After all, it will give them the greatest return for their effort. It is basic economic theory in practice. They will get a very good ROI on the cheap brand name traffic and are not incentivized to expand their campaigns to include the 40-60% of potential customers you are missing out on.

If you have numerous affiliates however, the competition amongst them will ensure that bid prices for your brand name increase so much, that your affiliates are forced to expand their campaigns into the (less competitive but less lucrative) long tail to generate more profits.

This scenario probably maximizes your traffic volumes but having plenty of affiliates makes it difficult to police their behavior and protect your brand. Although there are plenty of reputable affiliates out there, there are also the rotten apples seeking a quick gain at any cost and your brand reputation could suffer.

So what is the best option? Personally I would not be comfortable to make my brand name available to any PPC marketer if I did not have a personal, direct relationship with them. This rules out making your brand available to affiliates indiscriminately. I would select affiliates with a proven track record and with solid references.

At this point, I would not chose a traditional agency if they charged me a percentage of spend on my PPC campaign.

Would I run my PPC campaign in-house? I would, if I had the expertise, a well-known brand and a small set of products or services on offer. Otherwise, you’re better off to outsource it.

In the end, it doesn’t really matter who manages your (brand based) PPC campaign, as long as they offer you full transparency. Chose a PPC marketer that you can trust and that will work closely with you to optimize your acquisition costs. Incentivize them to perform and don’t reward them to spend money on your behalf without accountability. Verify that you get the most amount of qualified traffic for your money!

As I have said before, you cannot hide bad performance for long in the world of PPC. That is why affiliates tend to be better at PPC than agency. They have to perform to survive. But a fee-based agency could be more incentivized to look after your brand’s reputation. There is however no reason why the two models cannot be merged. With full transparency and accountability it is possible to reach a business model that combines the performance of an affiliate with the trust of an agency.