Pay-per-Click Observer

I know, everyone says that. I mean it a little differently.

One of my clients is switching from one analytics package to another. The process of doing so requires that we retag every one of the many thousands of keywords that we maintain for them. This would be impossible by hand, of course, and so we utilize technology– usually Ruby in our case– to do the grunt work.

Unfortunately, we’re a little fringe in our application, and so there’s really no such thing as a support process for people like us. You do searches, call this person, they talk to that guy, and he emails this other woman. Hopefully, we patch up the thing to work enough to accomplish our goal. It’s not going to get shrink-wrapped. It just needs to work.

So, today, I found myself banging my head against the Google AdWords API. It’s great. I love it. It doesn’t always work the way you think it will. Case in point, updating keywords with a new destinationUrl.

Turns out that if I included an ampersand in that URL, my code would, properly, encode it into ‘& amp;’. Then, when I called updateCriteria, which updates the keywords, with that my keywords would all get updated with that ‘& amp;’ in the URL– not reconstituted into a ‘&’. Google said “you don’t have to encode that” when I asked about it.

OK, so I patch soap4r to just ignore that entity. It submits the request with the ‘&’ in its original form. Error– you have to encode those. Actually, that’s the right answer in this case.

Anyway, I decide to explain this situation to the client. Empathetically, she listens and asks me the simple question “Those are so common; don’t you use those in other campaigns?”

D’oh! I do. How come they work, and this doesn’t? It’s because in those cases, I tend to drop everything and replace it to avoid synchronization problems. In this case, I was trying to “update” the keywords in place. Sure enough, replacing them works; updating them doesn’t.

So, I learned two things: one is some geeky tidbit about the AdWords API and the other is a valuable lesson about listening to my clients. Instead of pretending that everything was fine, I explained exactly the problem we were facing. My client used her fresh, but informed, perspective and broke the dam.

The older I get, the more I learn that, if you really want to do a good job, you need to able to admit that you don’t know everything. I’m not saying you need to admit that you don’t know anything. There’s a big difference.

Say you’re called into a big marketing meeting to talk about why things aren’t going well. The real answer is “we’re not doing a very good job of providing a compelling choice to our customers.” You can’t say that, though. That implies a lot of hard work to determine what it is your customers want and how you might apply your resources to provide that value better than your competition.

No, what you need is a strawman. You need something that no one can really argue with– but it doesn’t really require you to do much. Something that implies that you’re GOING to do something… later…

Enter the satisfaction survey.

They’re perfect. There’s a whole bunch of companies who will even do the work on that for you. All you have to do is go back to your desk and hire someone. Then go to lunch.

I’ve filled out several in the last couple of days. I’m honestly not sure why I bother. Two of those were for Yahoo’s and MSN’s PPC advertising. Do I have an opinion on those? Why, yes. Yes, I do. So, given the opportunity, I feel like it’s at least worth a few minutes of my time to answer. I think Yahoo paid me $25 to boot.

Generally speaking, I’m one of those people who won’t answer 1 or 5 on these things. I figure it could be worse, and there’s always room for improvement. Not so with MSN. They’re doing it so badly that I felt justified in liberally applying the 1’s. As I have ranted before, Google gets 5s. I’m no Google fanboy, but with a few exceptions, they do a very good job in separating me from my client’s money.

MSN and Yahoo both had the gumption to ask me how I felt about their editorial process. I wonder if they’re aware of the irony of that. Many, many times I have called to ask such questions as “how can ‘Kentucky Derby’ not be relevant to a section of the site about the KENTUCKY DERBY?!” ‘Rosa Parks’ was denied for Rosa Parks’ obituary. Not relevant.

How about service? Let’s compare. Google calls me and asks how my account is going. What are my plans? Do I have any problems? Here’s a few people to call if something comes up.

MSN? I’ve tried to arrange invoicing on one major account with them for years. Literally, years. They have a committee to decide if they’ll let you do that. They’re not meeting now because they’re too busy. I’m not making this up.

To give some credit, Yahoo has improved somewhat. They’re going to be getting some 3s from me. The new software is better than before. Yet, my inquiries into their API went into the blackhole of general email addresses without names. Their editorial process remains capricious. I have no clue who my rep is there. Is it because we only spend thousands of dollars every month?

So, you can imagine why, when I get their “we strive to exceed our advertisers’ expectations” surveys, I’m cynical. It’s like their house is on fire, and they’re going around asking the neighbors if they think the place needs any improvement.

You know what’s wrong. Everyone does. Put the fire out.

I’m a Google fan. At least, I’m a fan of the folks with whom I work within the context of AdWords.

What I am not a fan of is bullshit. There have been a couple of announcements made by Google that have ticked me off– not really because the actual thing happened, but because I don’t appreciate being patronized.

I understand that Google is a stock market bubble just waiting to burst. I don’t really blame them. They’ve been attractive because they’ve grown like a rocket. That simply can’t last forever, and in a market in which valuations are based on forward looking numbers, not continuing to meet outlandish expectations is somehow the equivalent of horrible failure.

Fine. So, Google’s a monopoly, and they’ve been printing money. Whenever the printer appears to be slowing down in the slightest, an “improvement” is made for the sake of “quality.” The last winner was the minimum bid.

In case you’re unfamiliar, that means that if you bid on something that Google thinks is worth $5/click, they’ll set that as the minimum bid. You don’t bid that much; you don’t run (theoretically). This was announced as a way to help relevancy. That, my friends, is bullshit. If I decide to run an ad for something completely unrelated to the keyword, and I’m willing to pay the piper, suddenly, I’m relevant. I have an ad that’s spot-on relevant by every measure, but if I’m not willing to pay, it doesn’t play.

Now, they’ve announced that they are going to stop using your actual bid to determine your position on the page. Instead, they’re going to use your maximum bid. Thus, you can crank your maximum bid and rise. This, according to Google, will:

“offer advertisers more control over achieving top placement while increasing the quality of our ad results for users.”

So, if I get this right, by allowing advertisers to simply buy their way higher, this will improve the experience for users?

If those users are stockholders, then yes. Maybe.

“This is due to more high quality ads becoming eligible for top placement, thereby allowing our system to choose from a larger pool of high quality ads to show our users.”

I call BS.

Again, I have to repeat, it’s Google’s business, and like it or not, they are by far the dominant player. I happen to generally like that. What I don’t like is reading things like the above quote. You need to make more money? Just say:

“Google has decided to change the algorithm in the interest of allowing advertisers to have more control over their position by allocating more money to their ads.” or “Google has determined that maximum bid more accurately reflects an advertiser’s willingness to pay for their position on the page.” or “Google has changed the placement algorithm. Suck on it.”

No one knows how their position is really determined anyway. This announcement is probably, like minimum bids, a headfake to spur advertisers to raise their maximum bids– just in case.

I’m of the opinion that, like it or not, Google is dealing with an auction scenario, and no amount of shifting the rules around is going to make much difference in terms of what people are ultimately willing to pay. If I decide a click is worth $.40, it’s worth $.40. If I can’t get it for that, I won’t buy it. If they won’t let me run it because it doesn’t make their minimum, I won’t. I don’t really care what the new rules are.

I would guess that Google knows that. They probably have an economics PhD working there who’s explained market theory. If they want to generate the most revenue, they need to find the place where the most dollars can effectively be spent. It must be something akin to an efficient market with this many people playing.

Instead, it appears to me that they’re going for the airline system: first class pays a premium to run whatever ad they want wherever they want; coach tries to run their ads at a level that makes economic sense and gets whatever position first class has passed on.

Still, it’s their business. Until the landscape changes (don’t hold your breath), they get to arbitrarily make the rules. I just wish they wouldn’t tinkle on my leg and tell me it’s for fire prevention.

PPC bid management was much easier when I started out.

First, I didn’t know what I was doing. That always helps to make things seem easier.

Second, you could actually see your position based on your bid. That’s a pretty dumb thing to fixate on, but if you review the first thing, you’ll see why I thought it wasn’t. You’d just announce “I want to be #2 for these words!” and you’d know just what to bid. I wrote all kinds of code to go to the Overture (now Yahoo!) site (the only game in town for a while), pull all our bids, and adjust them $.01 over our competition for our chosen position. I was so smart (see previous paragraph.)

These days, I’ve been at it long enough to know that generally applied bidding “strategies” are usually counter-productive. Bid management must arise from an understanding of the goals of the particular campaign and a regular looping back with analytics to continually tweak– first for large improvements and later for maintenance and small improvements. Sometimes, conversions are key regardless of bid. Sometimes, the cheapest click is the best click. Usually, it’s something in the middle.

Foolhardy experiments should be done periodically to challenge current assumptions and try out new things. If this ongoing tweaking stops, spend gets out of whack, CPC creeps up, opportunities are missed, and the campaign starts to, well, rot.

What’s more, the Google and Yahoo! have both moved to a system wherein you can’t tell ahead of time what your position will be. Your position is determined by something called a “quality score” which reflects your bid and your click-through-rate. However, it’s opaque to you, the advertiser. It could involve the phase of the moon or some internal strategy to “mix-up” results. We’ll probably never know exactly.

So, that means, you just can’t know what your bid has to be to hold a given position– though Google will allow you to opt in to a position preference, but you then don’t know what your bid will do. That just sounds like such a bad idea to me in about three different ways.

So now we know that nice, simple bidding strategies don’t really work anymore (or ever). In part 2, I’m going to talk about why you can’t necessarily just increase your bids to get more clicks and why there’s no such thing as the “optimal” bid. Prepare to have your mind blown. Groovy, baby. Yeah.

Listen, I don’t like the idea that Google’s a monopoly. They have all the power, and if you want to play in PPC, you will abide by their rules. Whether or not they “do evil” is irrelevant. My decision to spend my clients’ budgets is pre-made. Google gets most of it.

That said, the people with whom I work at Google, my account reps and salespeople, are great. They’re nice people. They’re smart. And they return my phone calls promptly and courteously. I have their cell numbers, and they don’t seem to mind when I use them or when I flip out about not being to run a given keyword for reasons unclear to me. All of this makes their monopoly much easier to take.

Still, since a monopoly’s not good for anyone, I’m going to let you two in on a few things that you must do on the advertiser side of your PPC functions to even get parity with Google. Obviously, in playing catch-up, parity’s not going to cut it, but it’s a start. As it is, your both losing ground and not doing much about it.

1) Hire qualified account reps and assign them to major accounts. Consider that a large spend shouldn’t have to happen first before you’ll pay attention. Rather, someone should use their judgment to give attention to potential advertisers to help them establish that spend. Find people who can communicate well, understand the system completely, and are given incentives to please the advertiser.

2) Give out these reps names, phone numbers, and email addresses. There’s nothing more frustrating than having an issue with a campaign and having to send mail into black hole generic address or call some 800 number only to wait on hold to talk to someone who a) uniformly doesn’t know how anything works (and reads the help page with you on the phone) and b) isn’t empowered to help if they did. I understand that these “entry-level” people are cheap and that aggregating them under “Agency Services” or just a “Help” function is economically more efficient. How’s that working out for you?

3) At least match the functionality of Google’s user interface. That’s not going to win the game, but creating an interface that’s more difficult and less efficient is most certainly going to lose it for you. Panama’s an improvement. MSN, you’re not even close. Microsoft can’t make a decent user interface? I have hundreds of adgroups. If I need, for example, to change the bids on them, I have to click half a dozen times for each. I’m not going to do that. So I just don’t run them with you.

4) I could manage them more easily with a decent API. Make yours easy to use and easily accessible. It’s hard to even find yours or get started using them. With the thousands of keywords we manipulate every day, an API is the only practical way to do it. Google’s does everything I need, and they’ve put engineers on the phone with me to find out what else I needed. I don’t like that they charge for it, but I’ll take that over none any day.

5) Rethink your editorial process. In both cases, I’ve had keywords that very obviously were directly related to the promoted content get rejected for irrelevance. In every submission, we assume that many of the keywords will be rejected by you and so don’t submit most. We don’t have that problem with Google, and yet they seem to manage to keep their ads relatively relevant. Please tell me that you’re not outsourcing to India to save money again?

The theme here is to take this function seriously. Fire the accountants and lawyers. They’re not helping. You need to make the investment in setting up systems to meet the needs of your advertisers instead of trying to force them to accommodate your inflexible business models. Microsoft, this isn’t a monopolistic operating system that everyone has to use. Yahoo, you had the lead. Those days are long gone. You both need to simply try a lot harder.

Every day, I make decisions about where to spend big piles of money. That decision is influenced by the cost of the clicks, but it’s also influenced by my anticipated management overhead in handling the campaign. It’s even influenced by how I feel about the vendor when the other factors are more or less even. Google makes an effort to make me feel like they care about my happiness. You guys have shown me that you wouldn’t even call me if I didn’t call you first.

I really want you to succeed. I want the PPC market to improve via the magic of competition. I can pretty much guarantee you that if you don’t make some fundamental changes, the gap will continue to widen, and you’ll find yourselves occupying your time with pointless acquisitions and mergers in a continuing “back-end” shuffle to right the ships. The real answer us to hire some sailors who know what they’re doing.

Thanks for listening and good luck.