AdWords Died, 2008 - Rest In Peace

(This article has been superceded, as I’ve dug into the details more - I offer an assessment of who is affected, and how much, in AdWords Search History Permutation).

Google has completely lost track of their mission, and is busy destroying the value of AdWords. Last summer, Google said it would be rolling out search history targeting. This was supposed to improve performance. I was sceptical. I’m now more than sceptical. I’ve seen the consequences. Google has killed the golden goose.

Google’s personalised search results, and their belief that the immediate history of search is important, can be easily demonstrated. However, whether this contributes to improved search result performance, is another matter.

I suggest that you sign out of Google Accounts before you add the following searches to your personal search history. It’ll help avoid polluting your personal search results with random stuff. It’ll also mean that your personal history doesn’t interfere with the results of the test. These queries are similar to a series of searches that I conducted, when looking into various client problems.

• Brazilian Tax Credit
• US Vacation
• river rafting
• cheap holiday
• US vacation

Here’s the two screen shots for results for the two searches for “US Vacation” - same search, but different precursor searches:

I believe that 4 out of the top 6 adverts are less relevant to the searchers intent, as a result of using search query history.

Notice the top position placement for holidays in Brazil - something that I’m not asking about. If I were to click this advert, what would my interest level be? Is it as high as my interest in a vacation in the US, or as high as my interest in Brazilian tax credits? Nope. So what will be the impact on CTR? Downwards.

Note the advert about US tax related issues. Again, if I wanted these, wouldn’t I have searched for them? So what is the likelihood of a conversion resulting from the clicks for these adverts? Remember that I’m in the UK. The total population in the UK is 60M and the US citizens resident here and needing to file US tax returns accounts for about 100,000, last time I investigated (1996). Even if the US resident population in the UK had doubled, that advert shouldn’t get a tiny fraction of the clicks as an advert relevant to “US Vacations”.

The last three searches have all been about travel - river rafting, cheap holidays and US vacations. Three of the top four adverts have nothing to do with the current search, though two of them do have something to do with the travel related queries of the previous track of search queries. But only one advert addresses what I asked for.

Note the absence of tax credits and Brazilian related adverts - but the new presence of shopping sites. What is it about “cheap holiday” and “us vacation” that implies an interest in shopping sites rather than travel sites?

I can see where Google is headed with this, but I suspect that the mechanisms need to be more carefully adjusted. This observation certainly explains why I’ve been seeing different behaviour in some client accounts over the last few months.

Deeply Disturbing

What I think I’m seeing, as a result of these changes, is a reduced conversion rate, and a higher average cost per click.

I think that the examples above make it clear why keyword search performance has dipped recently, reducing average CTR, reducing conversion rates and making the behaviour closer to that for content match. This is not the precision marketing tool that I was using last year. This is a weaker, more expensive and less precise tool that brings in a wider range of less interested users.

Reduced Intent…

The appearance of cheap shopping sites, high in the results, after an immediate search history for travel, shows that even when a user is following a series of related searches, that paid search results are being diluted by irrelevant adverts. Searchers clicking on these adverts are in a different phase in their buying process - they’ve been thrown back to “Needs Awareness” or “Research” phases - much as in content match advertising.

… Higher Priced

Why would using the search history result in a higher average cost per click?

I believe that Google is using the auction system to find the highest paying adverts. This means that the bids matching direct intent are now competing with a larger pool of advertisers. It means that each of the non-intent adverts has a higher revenue potential for Google. It means that the intent-focused adverts are paying Google at a price that is a consequence of competition with irrelevant focus. This potentially raises Google revenues, at least in the short term.

A back of the envelope calculation suggests that this *MIGHT* result in a small increase in revenue for Google, until advertisers reduce their bids. I suggest that this is a short term benefit.

Look at the first query results, above. Note that there are two relevant adverts - separated by several other adverts. The price of the higher adverts *used* to be exposed to the bid of the second relevant advert. It is *now* exposed to the bid of the third, but irrelevant, advert - so the price has jumped up, because these additional adverts are allowed to compete.

Response

I’m disgusted.

Google’s success was built on delivering search results that matched user expectation. Once again, we see Google acting to enhance revenue, without any concern for advertisers. This time, however, they have screwed the pooch. Users see less relevant results, too. This is not a good idea, as it will decrease the value of the search results page *for users*, and that will inevitably weaken interest in using Google.

I think that Google’s current product managers must have lost their copies of “Blown To Bits”.

Basic lesson:

The value of the search results page is a consequence of relevance. The lower the relevance of the entire page, the lower the value to users and the greater the rise of search atheism.

By destroying the relevance of paid search, Google has reduced the value of almost every page of search results. This has to be the pivotal moment for Google’s search dominance.

The impact has been reported, already - though I’ve not seen anyone draw a connection between recent lower CTR’s reported by Wall Street Analysts, and the weakened matching system now in use. However, the signal is clearly there, for me at least.

Personally, I’m dropping bid values, adding more negative keywords (though I have no evidence, yet, that this will reduce my clients adverts from appearing on irrelevant searches), focusing on exact match and phrase match. If Google is going to show my clients adverts to searchers who have no direct interest in my clients’ services, then my response has to be to reduce the bids - because the number of clicks per conversion will increase. It is inevitable, when the search history is used so insensitively.

Summary

Google’s AdWords product managers have lost the plot.

AdWords is no longer a precision marketing tool, used to put relevant adverts in front of an interested audience. It is now a blunderbuss, blasting anyone near the aiming point with a random scattering of irrelevant adverts. I might as easily direct budgets to general display advertising and get somewhat similar results.

I’m telling my clients to reduce budgets on Google and increase budgets for Yahoo! and MSN. These other platforms have their own focusing problems, but Google has completely lost any rational idea of what a search results page should look like.

I’m disappointed. I thought that Google employed smart people. Obviously not. Googlers: find your aged and dog-eared copies of “Blown To Bits” and re-read the bits about Navigation and Search and the value of page content. Then try to explain how reducing relevance will have a long term beneficial effect on your own brand. You’ll fail.

Forget the hand waving arguments about the value of the search history. Look at the results pages. Look at the dropping CTR. I bet that you’ve even seen an overall reduced volume of clicks per page. You’ve turned a terrific marketing tool into an unfunny joke.

Congratulations - you have completed my conversion. I’ve gone from AdWords advocate to someone that would sooner see the project be killed, than continue like this.

Updates

I was so cross when I wrote this, that I forgot to mention the Nash Equilibrium. I suspect that this perversion of search is a consequence of Google’s Chief Economist, trying to get more revenue, when Google have done The Right Thing by reducing their greed on search results pages that shouldn’t have adverts on them (that comScore article, referenced above, is pretty good about this). The Nash Equilibrium says that intermediaries like Google can squeeze out a certain amount of money from advertisers and from publishers, before advertisers start squeaking and reducing their spend.

Anyway, I added a couple of paragraphs spelling out why adverts cost more now, and who I think is probably responsible for destroying Google’s value.

Doubtless Google have numbers that I don’t have. (Duh). I can only make rational observations on what I can see and infer. Give me some more evidence and I might change my mind.

2008-03-17 Two new articles, refining the ideas in here. A short article summarising Search History Permutation, and a longer article, working through the psychology, marketing and economics of Search History Permutation in AdWords.