AdWords users will likely have mixed feelings about the changes being implemented for the search ad service. A new quality score algorithm and elimination of the “inactive for search” status could help advertisers, but the replacement of “minimum bids” with “first page bid estimate” will likely lead to higher prices (and more revenue for Google).

First, the changes in quality score: Google will now calculate the quality score in real time, as a user is executing a search, rather than having a static score. Location, phrasing, and other factors will determine the score, along with clickthrough rates and landing page quality. However, landing page quality will be evaluated less frequently now.

Google has eliminated the “inactive for search” status for searches that were deemed to yield few or no impressions (like if you were advertising for bulldozers and had a bid for “bunnies”). Now, they will allow all keywords to be available on Google.com. Google did warn that they don’t believe a lot of the keywords with low quality scores will be of much use, but could yield quality impressions in certain situations.

Perhaps most controversial is the elimination of the minimum bid in favor of “first page bid estimates.” Technically, this shouldn’t be much of a change. After all, it’s just a difference in wording. You can still bid the old minimum and getting on the first page will still cost the same as it used, but now Google is telling you how much it costs to get on the first page, so it’s more likely you’ll pay that higher amount. With others paying the higher amount, competition may get stiffer for first page placement of more competitive terms. Non-competitive terms will likely see little change, but big money keywords are going to become more expensive to rank for now as advertisers decide to bite the bullet and pay extra for the first page.

Honestly, it’s good to know how much money it will take to get on the first page. That is useful information. But it is also likely to lead to more revenue for Google, and could wreak havoc on the campaigns of more experienced AdWords users. Likely gone are the days when a $.20 bid is on the first page with a $2.00 bid.  You can understand that Google wants to reward the high bidder.  Experienced AdWords advertisers like Dan Savage have already felt the heat from Google, completely ruining his business model. It’s a rather interesting tale.

This entry was posted on Tuesday, September 16th, 2008 at 3:18 pmand is filed under Search Engine Marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.