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Tapping the Power of Google’s AdSense Bidding

  |  December 9, 2005   |  Comments

Google has added some new features to its AdWords system. Here’s how to take advantage of them.

Google recently updated AdWords to allow advertisers to bid separately for AdSense contextual clicks without having to go through a challenging, time-consuming system hack. Many advertisers have been more than willing to buy clicks from Google’s AdSense network. But because those clicks tend to originate from potential customers who are early in the buying cycle, marketers and advertisers prefer to focus budgets on search first, paying a lower price for contextual clicks if budgets and ROI (define) allow. Before, the solution was to clone campaigns and adjust syndication network settings to create a search-only campaign and a search-plus-content campaign.

Google’s latest changes have been well received, and I applaud the company for finally implementing them.

The news gets better. Google has retained the SmartPricing click-discounting system. It was implemented to bring the billed CPC (define) in line with the true estimated click value. When you set your CPCs for the AdGroups, check later to see how close the billed CPCs are to your bid. The greater the difference, the more likely SmartPricing kicked in. The alternative reason for the difference is Google’s Auto Discounter. It takes bid gaps in AdRank (expected effective CPM (define)) into account.

To enable the separate content bidding on your account, you must make some edits at the campaign level:

  1. Log into AdWords.

  2. Select the campaign to enable for separate contextual bidding, and click "edit settings."

  3. Within the "edit settings" tab, selecting the desired network. If "content network" is enabled, you can select "content bids."

When you return to your campaign, the AdGroups within the campaign have a content bidding box.

If you set up separate campaigns to access the AdSense network at a lower cost, you probably track AdSense clicks separately. The two most common techniques are separate inbound tracking URLs by campaign and the less-accurate method of the presence of the Google syndication domain in the HTTP referrer. Regardless of the method you use, the recommended way to track a campaign’s contextual clicks is through Google’s dynamic URL appending system, the ValueTrack tag. Though not well publicized, ValueTrack is a great way to track clicks separately. Google gives the example of how to specify the additional parameters into your landing page URLs as www.yoursiteinfo.com?type={ifsearch:GoogleAdWordsSearch}{ifcontent:GoogleAdWordsContent}. More details are available on the Google support site.

Google has rolled out some other great AdSense enhancements. With a site-targeted campaign, you can now select specific properties or sites on which to advertise. The sites themselves often promote this option. There are some major changes in the way you advertise within this subnetwork. Site-targeted campaigns are not CPC auctions at all, but CPM auctions. You can select either a standard text ad or a graphical banner ad for the site-targeted campaign. For its network, Google currently accepts several standard banner sizes.

In the site selection process for site-targeted campaigns, Google lists the sites based on the keywords for which the sites (or pages of sites) are deemed relevant. This gives you an opportunity to click on the sites to determine their suitability for your campaign. Some seem very well suited for display (banner) advertising. We may see an increase in the number of advertisers tapping Google’s network.

Before you create new banners or convert old ones to fit Google’s image- and file-size constraints, know Google determines whether to show a site-targeted CPM ad based not only on the CPM auction for the specific site, but also on the calculated, predicted effective CPM of the CPC AdSense text ads. That means if Google can make more money displaying two to five text ads instead of your one banner, it’ll do just that.

Google’s AdWords system is agnostic when the choice is between a CPM or CPC ad because the AdRank score is a predicted effective CPM, so there are no special deals to be had through site targeting rather than running the same ad via CPC. Yet the extra level of targeting might be worth investigating for marketers seeking more controlled contextual opportunities.

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Kevin Lee

Kevin Lee, Didit cofounder and executive chairman, has been an acknowledged search engine marketing expert since 1995. His years of SEM expertise provide the foundation for Didit's proprietary Maestro search campaign technology. The company's unparalleled results, custom strategies, and client growth have earned it recognition not only among marketers but also as part of the 2007 Inc 500 (No. 137) as well as three-time Deloitte's Fast 500 placement. Kevin's latest book, "Search Engine Advertising" has been widely praised.

Industry leadership includes being a founding board member of SEMPO and its first elected chairman. "The Wall St. Journal," "BusinessWeek," "The New York Times," Bloomberg, CNET, "USA Today," "San Jose Mercury News," and other press quote Kevin regularly. Kevin lectures at leading industry conferences, plus New York, Columbia, Fordham, and Pace universities. Kevin earned his MBA from the Yale School of Management in 1992 and lives in Manhattan with his wife, a New York psychologist and children.

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