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Cringely Questions AdWords

By - September 23, 2005

I’ve run across many a speculation on what levers and dials the folks at Google are pulling behind the AdWords curtain. This is another one, and begs the question: can we have a bit more transparency?

One of my readers makes his living selling goods over the Internet, and his sole means of obtaining customers is through Google AdWords. His business is robust for a one-man operation and he makes a good living. Knowing the actual numbers, I would say he makes a VERY good living, which shows the effectiveness of Google and AdWords as an advertising medium.

But one can never make enough money, it seems, so this reader decided to do some research to see if he could improve his results by modifying this and that. He decided that the best way to conduct this research was not by altering variables on his existing, very profitable web site, but by creating a separate site purely to be used for these tests.

Clearly ,this is a behavior that the big brains of Google did not expect.

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11 thoughts on “Cringely Questions AdWords

  1. molly says:

    Although I don’t think anyone would argue that the shadowy dealings of Google’s algorithm beg for more transparency, most of the questions raised in Cringely’s article have reasonable, visible answers:
    This first bit of information that is important to understand when looking at Google’s algorithm is the concept of account history. An account’s cumulative click-thru history has a huge effect on its overall placement and performance. Over time, a well-performing (i.e. terms with high ctr %) campaign will see costs go down while position and clicks remain high. Cringely states that his friend’s initial campaign was running for a year when he began the test. This second campaign would be basically starting with a blank slate – no click-thru history. To Google, it’s a new competitor and is treated as such – paying top dollar based on his max bid of $1.00. Had he placed this same max bid of $1.00 into the original campaign, he would have seen very different results.
    Cringely’s friend then lowered his bids to .40. There’s no indication of how long this new campaign had been running when the new max bid was set, but I’m assuming it was a short timeframe, not coming close to accumulating the history of the original. This brings us to another Google concept of URL competition. Google will only run one ad bearing the same URL per keyword. If an advertiser is running two identical campaigns simultaneously, he is essentially competing with himself for placement as only one of his ads will be shown. In all likelyhood, this drop in traffic can be attributed to the original campaign getting a larger share of the clicks, due to having a stronger click-thru history. It’s possible that the original campaign, with a powerful and positive click-thru history, was able to gain ranking high enough to be syndicated beyond Google Proper, while at a .40 Max Bid and no CTR history, the new campaign wasn’t able to pull the same weight.

  2. Tim says:

    Don’t mean to be a grammar nazi, but it doesn’t beg the question, it raises it.

  3. joe says:

    Then don’t be a grammar Nazi. Oh by the way, not to be a capitalization Nazi but Nazi should be capitalized. (possibly gammar too, any english majors in here?)

  4. joe says:

    Did you mean “I don’t mean to be…” Not just “Don’t mean to be…”. I mean really, who is meaning to be the grammar Nazi … I am so confused.

  5. Cringely’s account is nonsense on stilts.

    As a previous poster mentioned, the old account’s performance history was counting in its favor, so the comparison was far from scientific.

    Dropping bids from $1.00 to $0.40 dropped the new site’s average ad position and thus visibility significantly – significantly enough to be the entire explanation for the drop in clicks, perhaps.

    There are scientific explanations for most things, and it isn’t worldly wise to say the house always wins – it’s just a yawner.

    Messing with the integrity of the auction by double serving ads for the same site is unfair to other advertisers and against the AdWords TOS, BTW.

  6. Adam says:

    > One of my readers makes his living selling goods over the Internet, and his sole means of obtaining
    > customers is through Google AdWords

    Eggs. Basket. Fool.

  7. dansroka says:

    Molly, I came up with the same conclusion as you. The newly-decreased ads for test site are now probably competing directly with the ads for the original site.

    One thing the article missed is that high ad positions are very expensive because they are in high demand. People assume that a high position translates directly into ad success, and bid a lot to get them. Yet while this can contribute to an ad’s success, it is only one metric out of many. As his original site shows, you can have a very successful AdWords campaign for much cheaper if you don’t confuse position with success.

  8. It’s not just the algorithms behind Google Adwords that can produce anomalous results for advertisers.

    For the details, see:

    “Google’s Gag Order: An Internet Giant Threatens Free Speech.”

  9. Bob Cringely says:

    Since this is all about my column I’m surprised nobody bothered to contact me. Maybe it is easier just to surmise. Certainly it is more fun.

    The two campaigns did not point to the same URL, so they were not sharing clicks. Instead the sales web site was duplicated under a new URL.

    The product being sold is also one with very little AdWords competition so ALL of the ads ALWAYS appeared on the first page of results no matter how much the bid.

    I wrote more in a subsequent column: http://www.pbs.org/cringely/pulpit/pulpit20051006.html and will likely follow-up even further in my next column that appears on Thursday.

    You’ll find that one especially fun to criticize.

  10. viki says:

    What an extraordinarily valuable contribution to the Net, its users, and Western Culture.

  11. They in the Google search engine are earning when he has sie positions of one’s page high in results of searching, that is there is a space for a few web pages, wanting to be on these places is many, and for you what cannot be high must kożystać from AdWords. To be in Google high, it means at once that he will be frequenting the web page much of people.