This seems suspect for a number of reasons, but it’s interesting to think about so we’ll let the reader decide. Widely read PBS tech-author, Robert X. Cringely, outlines an experiment (one experiment, one reader, one website) that concludes Google AdWords punishes advertisers for dropping keyword bid amounts. But many remain unconvinced.
A reader who follows Cringely’s work intimated to him an experiment to test Google’s highly profitable AdWords program by setting up a duplicate website to see how his click-through rate fared at different AdWords bid amounts.
While it was previously known that a higher bid will win an advertiser a higher ranking for search results, the experimenter was surprised at what happened with his variable website.
The original site was very successful, pulling in a successful living for the online peddler. For this original site, he was paying about 10 cents per keyword, generating 15,000 clicks-through per day.
For the new site, he chose exactly the same keywords, but bid $1.00 per keyword, 10 times the bid for his original site. He found that his ads moved up through the rankings as a result, soon generating the same number of clicks-through as the original site.
After dropping the bid from $1.00 to $0.40 per click, clicks-through dropped from 15,000 to just 1,200 per day, creating a seemingly punitive result in AdWords, though he was still paying four times the price for the same keywords on the original site.
Cringely admits he doesn’t know the exact reason for this, as Google carefully guards the secrets of its algorithms.
“I have no idea what the heck is happening here, but my friendly reader, who makes his living from this stuff, has a theory. He believes the Google AdWords algorithm tries to do many things and one of those is to encourage advertisers to pay more for words. By modifying something that in turn modifies the results, Google is effectively encouraging advertisers to change their behavior,” writes Cringely.
In essence, Cringely and his reader suggest, Google is strong-arming advertisers into spending more money, a perfectly legal, even if debatably unethical, practice.
While penalizing an advertiser for dropping his bid is interesting, one has to ask about the possibility that the penalty actually stemmed from duplicate content, which Google seems to despise.
John Battelle has also covered the subject with his own readership posting some nasty comments about the experiment.
“Molly,” for one Battelle reader, is unconvinced.
“If an advertiser is running two identical campaigns simultaneously, he is essentially competing with himself for placement as only one of his ads will be shown. In all likelyhood, this drop in traffic can be attributed to the original campaign getting a larger share of the clicks, due to having a stronger click-thru history,” posted Molly.
Echoing Molly’s sentiment is Andrew Goodman with some strong words of his own.
“Cringely’s account is nonsense on stilts. As a previous poster mentioned, the old account’s performance history was counting in its favor, so the comparison was far from scientific,” said Goodman.
Erin Bradley at Search Views joins the pummeling.
“While Cringely’s overall thesis is correct (that Google is far more profit-driven than their public image suggests), he obviously knows little about SEM,” charged Bradley.
So far, the experiment is not faring well.
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