Home  › Search › Paid Search
enhanced-campaigns

The Great Enhanced Campaigns War of 2013: The Surprising Winner

  |  February 22, 2013   |  Comments

As Google rolls out Enhanced Campaigns, many advertisers are petrified that prices will rise.

Like all great rulers, Google has grand ambitions and a continuing need to finance them. While it has no shortage of cash on hand, its continuing source of cash - targeted clicks - has faced downward pricing pressure of late. Wall Street has decided to stop beating the company up about this; it appears that Google has addressed the issue of the future viability of mobile click inventory.

Those who pay for clicks continue to demand some kind of obvious return on those clicks. In recent years, advertisers have adjusted increasingly quickly to low-ROI inventory. They've scaled back their investments in unprofitable clicks. And in a recessionary environment with some companies dropping out of keyword auctions, some advertisers have been like profit truffle pigs: only interested in particularly juicy inventory, and contented with slower growth. This has cooled off sentiment in the click auction.

When clicks are seen to be losing value, further scrutiny results in a further decline in their value. The market dynamic that once drove click prices up can drive them down, too.

As Google rolls out Enhanced Campaigns, many advertisers are petrified that prices will rise. Why? Because they assume that's what Google wants. They further assume that Google has the power to enact this by fiat.

I wouldn't be a hardcore PPC control freak if I didn't have major reservations about the changes. I want, for example, the ability to break out mobile campaigns and bid all those keywords on different ratios rather than for computers at the keyword level (not the campaign level). Even if I won't always do it, I'd feel better knowing I had the right to do it.

The reality is, though, if ad prices are going to rise due to significant disruption in how the mobile environment works - via the injection of new device capabilities, new user expectations, and new classes of advertisers entirely - then no amount of jawboning on Change.org is going to chase away that emerging market for clicks and calls. Prices are going to both rise dramatically and fall dramatically, depending on who is bidding.

Oddly, my reaction to Enhanced Campaigns is a bit like how I feel when I'm 20 percent less jetlagged than a colleague at a conference. As soon as I hear others moaning as if their lives will soon end due to a little sleep deprivation, I feel cheerier and cheerier. Like Yogi Berra said, 95 percent of this game is half mental.

Google Just Can't Decide How Evil to Be

Let's assume the "worst": that click prices are going to soften again soon, and this new architecture is Google's way of wiggling out of that problem so it can raise some money to tide it through a painful transition period.

Historically, what have governments done when outsiders have certain expectations about their currencies that they cannot easily meet from the inventory they have on hand? They've created money by fiat.

Google is our "government." To many in our industry, that's how powerful Google is perceived to be. (But doesn't that just illustrate its fragility in the face of even stronger forces?)

The history of currency debasement is a long one, as recently illustrated by Philip Coggan in "Paper Promises: Money, Debt, and the New World Order."

Google has been through troubling fiscal times before, when it seemed to need to pull fast ones to meet outside expectations from very diverse sources (users, Wall Street, advertisers, etc.,) all at once. This has triggered schizophrenic behavior. Given that it was Google itself that injected the market principle so heavily into the click auction in the first place, including the bid discounter mechanism, its herky-jerky means of creating various exceptions to the market principle have been tough to read.

Google has been super-tough on relevance and conservative with monetization over the years, but on the other hand has tried to gin up bidding enthusiasm with strange framing mechanisms like "first page bid" and hard-to-understand default settings.

Google has done far better than competitors at taking a certain percentage of clicks (fraudulent ones) out of circulation, staunchly defending the worth of a click. But on the other hand, the company has continually allowed waves of questionable partner traffic to pop up in the Automatic Placements in the Display Network.

In several recent interface changes that seem bent on extracting more funds from the unsuspecting advertiser, Google has apparently chosen to print more money for itself, much like a sovereign treasury.

Devaluing the "Click Currency": Can Google Get Away With It?

Despite the other rationales for the sweeping platform revamp referred to as Enhanced Campaigns, it's not hard to see this as a continuation of Google's recent attempts to mandate higher click pricing by fiat.

How do such efforts ever fare?

Let's say the U.S. government wants to more effectively inflate its way out of its $15 trillion debt by creating a larger money supply, effectively debasing the relative value of the currency. This never ends well. If the effort gets out of hand, hyperinflation runs rampant, bringing the economy to its knees. Far from financing the lofty ambitions of a global power, hyperinflation can hasten one's demise.

In our world, the stakes are more modest. Google, while it isn't in debt, perhaps feels the need for continued strong profits so it can finance a "war chest." And those to whom it promises clicks have been demanding just as many clicks as ever, and refusing to pay more for them. Why not mix some of the lower-quality clicks in with the good stuff? There are plenty of those to go around. The trick is millennia old: not so different from mixing base metals in with gold and silver coins. "By fiat, I'm giving you the same thing as before." Mission accomplished.

There is a fine line between exerting sovereign power to get out of a jam, and thinking one can distort reality forever. Some money creation is good; too much is bad. Even very powerful regimes that seem to have "infinite" ability to keep the money train rolling will eventually be shut down by forces stronger than themselves. As Coggan posits, money is a promise. Eventually, that promise must be kept.

Clicks, too, are a promise. We pay for them conditionally, not unconditionally. If something changes in how broad matching works, for example, some advertisers will overpay for a quarter or two. But eventually, everyone optimizes reasonably well in the aggregate and prices fall to where they should be.

Despite Google's apparent omnipotence - its ability to rework the alignment of the planets, and to impose new hairstyles on the executive teams of competing firms without so much as a single recorded conversation with the victims' hairstylists, etc. - it hasn't been almighty Google that has emerged victorious in the past three years' battles over click pricing. It's been you.

Bundling: Bad

In the last decade, investment banks working on behalf of mortgage lenders - with the complicity of the bond rating agencies - began to "bundle" subprime debt into packages with good quality debt, placing an unrealistic value on that debt. Because it was hard to see inside the black box, those bonds maintained their value reasonably well for a long period of time, until everything finally unraveled (in this case, triggered by massive loan defaults and various scandals). The prices for those securities moved, in orderly fashion, to pennies on the dollar.

If You Snooze, You Lose

If some kinds of lower-quality clicks will be bundled in with the more targeted clicks that most advertisers desire, then advertisers haven't "lost." They'll be annoyed. And they'll bid less. Click prices will fall.

In an ideal world, we wouldn't have to watch that happen. But unless you have a rigid view of what you're supposed to pay for a click, the outcome for the diligent advertiser who digs for value is going to be, as ever, a win.

Tags:

ClickZ Live Chicago Join the Industry's Leading eCommerce & Direct Marketing Experts in Chicago
ClickZ Live Chicago (Nov 3-6) will deliver over 50 sessions across 4 days and 10 individual tracks, including Data-Driven Marketing, Social, Mobile, Display, Search and Email. Check out the full agenda and register by Friday, Oct 3 to take advantage of Early Bird Rates!

ABOUT THE AUTHOR

Andrew Goodman

Goodman is founder and President of Toronto-based Page Zero Media, a full-service marketing agency founded in 2000. Page Zero focuses on paid search campaigns as well as a variety of custom digital marketing programs. Clients include Direct Energy, Canon, MIT, BLR, and a host of others. He is also co-founder of Traffick.com, an award-winning industry commentary site; author of Winning Results with Google AdWords (McGraw-Hill, 2nd ed., 2008); and frequently quoted in the business press. In recent years he has acted as program chair for the SES Toronto conference and all told, has spoken or moderated at countless SES events since 2002. His spare time eccentricities include rollerblading without kneepads and naming his Japanese maples. Also in his spare time, he co-founded HomeStars, a consumer review site with aspirations to become "the TripAdvisor for home improvement." He lives in Toronto with his wife Carolyn.

COMMENTSCommenting policy

comments powered by Disqus

Get the ClickZ Search newsletter delivered to you. Subscribe today!

COMMENTS

UPCOMING EVENTS

Featured White Papers

IBM: Social Analytics - The Science Behind Social Media Marketing

IBM Social Analytics: The Science Behind Social Media Marketing
80% of internet users say they prefer to connect with brands via Facebook. 65% of social media users say they use it to learn more about brands, products and services. Learn about how to find more about customers' attitudes, preferences and buying habits from what they say on social media channels.

Marin Software: The Multiplier Effect of Integrating Search & Social Advertising

The Multiplier Effect of Integrating Search & Social Advertising
Latest research reveals 68% higher revenue per conversion for marketers who integrate their search & social advertising. In addition to the research results, this whitepaper also outlines 5 strategies and 15 tactics you can use to better integrate your search and social campaigns.

Resources

Jobs

    • Digital Marketing Analyst
      Digital Marketing Analyst (GovLoop) - Washington D.C.Are you passionate about audience acquisition? Love effective copy and amazingly effective...
    • Product Specialist
      Product Specialist (Agora Inc. ) - BaltimoreDescription: The Product Specialist is hyper-focused on the customer experience and ensures that our...
    • Partnerships Senior Coordinator
      Partnerships Senior Coordinator (Zappos.com, Inc.) - Las VegasZappos IP, Inc. is looking for a Partnerships Senior Coordinator! Why join us? Our...