Google Slap Part 2

You may remember the first slap last year – now Google is at it again.. Story By Betsy Schiffman/ Wired Magazine

For Some Advertisers, Google Slap Means Plummeting Revenues 

Now Google is arguing that the plummeting click-through rates on its ads are a good thing.

The major change Google made in early March to its AdWords algorithm is resulting in a double whammy for some advertisers: The rates they’re paying for ads have rocketed while conversion rates for those ads have dropped.

Disgruntled advertisers have dubbed the move the "Google slap."

"If it were just a rate increase, I would have tolerated it. But my ad rates have doubled and I’ve got no business," says one longtime AdWords advertiser, "Sam," who doesn’t want his real name published for competitive reasons. He says he runs a very specialized niche service, and doesn’t want his competitors to know about his current business crisis.

Google has argued that the recent drop in paid clicks on its advertisements is intentional. The logic is this: If Google serves fewer but more relevant ads for any given search query, it can potentially increase click-through rates and ultimately raise ad rates. That should be beneficial for advertisers, who may get fewer but better quality leads from their ads.

The affected advertisers say it isn’t working according to plan. "Sam" says he got about 100,000 impressions on ads served for two keywords in February (which resulted in $250,000 in revenue), and in March that number dropped to 20,000 impressions and essentially zero revenue. To compensate for lost sales, he says he started buying advertising from Yahoo and Microsoft.

It’s not clear exactly how Google altered its algorithm, but many online marketers believe the company adjusted advertisers’ quality scores, based on the content of the landing pages on their websites.

You can read the rest of the story at Wired Mazine…

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