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How Google Inflates AdWords Bids

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Re: How Google Inflates AdWords Bids

#31

Post by adgar »

joelrunyon wrote: post #21
pdenya wrote: post #7

In my experience Google required me to speak to a representative to claim my $100 credit. I had already done research with the keyword tool and had a list of keywords I wanted to use and the prices I was going to initially bid for them. The woman I spoke to used generic keywords instead of the specific keywords I requested ("Necklace" vs "Bendable Necklace", etc) and set the per-click price much higher than I request…

This isn't standard Google-fare. Are you sure you weren't talking to a marketing consultant that was giving out those coupons (Google gives those out to consultants like candy to sign up new advertisers).

I'm skeptical about this too. Especially since your parent poster seems to imply he got Google on the phone with a $100 free adwords card, which everyone and their mother has gotten at one point or another. I just got one from my freaking domain provider for "loyalty" (2 years? Loyal? meh)

Re: How Google Inflates AdWords Bids

#32

Post by 6ren »

Well, if the price goes up, the other bidders should reconsider if it's worthwhile for them. But I have to say that Google's business model is brilliant:

- advertisers bid against each other for top placement. It is absolutely fair for the advertisers to compete with each other, and google cannot be accused of squeezing them with higher prices - yet as a natural by-product, google gets the highest possible price...

- google provides a wonderful service to people searching the web, for free - how could you possibly complain about that? Yet, it has these enormous revenues from advertisers. So, this is the old TV formula; but improved with the auction above.

It's fair, it's helpful, it's enormously profitable.

Re: How Google Inflates AdWords Bids

#33

Post by Retric »

6ren wrote: post #32

Well, if the price goes up, the other bidders should reconsider if it's worthwhile for them. But I have to say that Google's business model is brilliant: - advertisers bid against each other for top placement. It is absolutely fair for the advertisers to compete with each other, and google cannot be accused of squeezing them with higher prices - yet as a natural by-product, google gets the highest possible price ...…

TV commercials also used the auction model. Just look at how much it costs to run adds during the supper bowl.

Re: How Google Inflates AdWords Bids

#34

Post by joelrunyon »

zandorg wrote: post #11

I got a $45 voucher (in the UK; £30) and I spoke to a rep on the phone. He said do this, do that, yet about 2 months later and my spent is £10 for that period! I'm actually disillusioned because I'm not getting enough clicks! My theory is that Bing is taking more and more clicks away, so I'll have to find another way of promoting my business/projects.

Another simple fix: Use Bing.

Re: How Google Inflates AdWords Bids

#35

Post by kingsidharth »

So people spending $100 bidding higher. Let's say $50/click will increase your bid pressure? They will get 2 clicks and done. While regular bidders will stay in for long.

I highly doubt google has more freeloaders than paying customers.

I am not sure how it works now but last time I got a voucher (last year) they charged you for actual click and those $100 are just to get you started.

Re: How Google Inflates AdWords Bids

#36

Post by AJ007 »

jcampbell1 wrote: post #17
AJ007 wrote: post #13

Earlier quoted context omitted.

Adwords is an auction. Because other people want to spend more than you doesn't make it a scam. And it doesn't matter why they want to spend more. People that purchase newspaper and traditional television advertising don't measure ROI because they can't. I don't know how much credit Google gives out, but when a major auto insurance company has blanket $100 per click bids, that $75 voucher's impact will be measured fa…

With the auction model, the spoils go to whoever has the highest margin, and in my industry it is people doing reverse billing scams. I am not willing to advertise a price of $9.95, and then charge people's credit cards $130 every month after that, based on an agreement that is in low contrast and 11px font.[1] You are right, that an auction model doesn't make it a scam, but it does invite scams, and Google should be…

As long as it is an auction process, there is intense pressure on all involved to extract as much value as possible from every customer.

Re: How Google Inflates AdWords Bids

#37

Post by anon808 »

AJ007 wrote: post #36
jcampbell1 wrote: post #17

Earlier quoted context omitted.

With the auction model, the spoils go to whoever has the highest margin, and in my industry it is people doing reverse billing scams. I am not willing to advertise a price of $9.95, and then charge people's credit cards $130 every month after that, based on an agreement that is in low contrast and 11px font.[1] You are right, that an auction model doesn't make it a scam, but it does invite scams, and Google should be…

As long as it is an auction process, there is intense pressure on all involved to extract as much value as possible from every customer.

Agreed, that's the incentive. Now, whats you're opinion of that incentive? Do you think its something you'd personally like to see more or less of?

Re: How Google Inflates AdWords Bids

#38

Post by anon808 »

joelrunyon wrote: post #20
AJ007 wrote: post #13

Earlier quoted context omitted.

Adwords is an auction. Because other people want to spend more than you doesn't make it a scam. And it doesn't matter why they want to spend more. People that purchase newspaper and traditional television advertising don't measure ROI because they can't. I don't know how much credit Google gives out, but when a major auto insurance company has blanket $100 per click bids, that $75 voucher's impact will be measured fa…

^This^ Just because you lose, doesn't mean it's a scam. If you're getting outbidded by people they more-than-likely figured out a way to monetize the customer on the backend a lot better than you. A lot of things on Adwords depend on breaking even on the front end and monetizing them over the long-term. That said, the article does raise some interesting points - but it's interesting to see how those vouchers seem to…

I think the ultimate point isn't that google is running a scam, but that it's favoring scammers to 'win' their auctions. Facilitating a scam and scamming aren't the same, but they're both not something I would want to be a part of.

Re: How Google Inflates AdWords Bids

#39

Post by patio11 »

This would be a mostly ineffective and impressively devious way to increase ad bids when Google could just, you know, refuse to fill orders at prices below a reserve price chosen to maximize their own revenue.

You know they do that, right?

AdWords is not an auction. AdWords incorporates an auction-like mechanic in part of its pricing strategy. There are numerous other ingredients in the secret sauce. We don't know what they are, but some of the public ones are explicitly chosen to make understanding auction mechanics less lucrative. (That one is called "Quality Score", which is a wonderfully Orwellian coinage for "Maximizing Google Revenue Heuristic.")

In an auction you are competing against other bidders. On AdWords, you are competing against Google. In aggregate, Google is winning.

(n.b. I like AdWords, but it would be an impressively bad time to assume corporate fluffy-bunnyhood when managing one's AdWords account.)

Re: How Google Inflates AdWords Bids

#40

Post by robryan »

patio11 wrote: post #39

This would be a mostly ineffective and impressively devious way to increase ad bids when Google could just, you know, refuse to fill orders at prices below a reserve price chosen to maximize their own revenue. You know they do that, right? AdWords is not an auction. AdWords incorporates an auction-like mechanic in part of its pricing strategy. There are numerous other ingredients in the secret sauce. We don't know wh…

I have been wondering about that soft reserve value they have. Know of any information online about how it is calculated? Been wondering without competition on a keyword if there is some mostly common lower bound on bid to be shown or does it fluctuate depending on the search term.
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