Edward Culliford

What are Google hiding behind their latest "insights"?

For the first time since 2009, Google have updated their introductory video on the inner workings of the AdWords auction and how it is affected by Quality Score. We look at what's changed in the last five years, and what Google still aren't telling us.

Forget Jurassic Park 4 and the latest Godzilla remake, because the Adwords team have come up with something much more exciting. Five years after his initial superstar appearance in the seminal YouTube video “Introduction to the ad auction”, Hal Varian makes a stunning comeback in the must-see “Insights on the Adwords Auction” to tell us all about Quality Score. If you’re not familiar with Hal Varian, you should know that he is the Chief Economist at Google, emeritus professor at the University of California, Berkeley, and the go-to guy for presentations about the finer points of the inner working of the Adwords auction.

Back in 2009, Hal’s “Introduction to the ad auction” ran through the basics of how the Adwords ad auction works, what factors determined Quality Score, and how Quality Score affects ad rank and actual cost-per-click. In his new video he covers near-identical topics, and I’ve been playing a fun game of Spot The Difference to see just how much can change in five years of PPC. Note that none of the information covered in the new video is really “new”, so the interest lies less in what’s presented and more in the emphasis placed on different elements of Quality Score, which may signal the future direction of the Adwords model.

I, for one, am sad to see that Hal has traded in his tank-top, wonky whiteboard and blue-tacked signs for long sleeves, shiny computer graphics and an expertly arranged desk (complete with an unnecessarily large stapler). However, more important differences between the two videos are:

Format impact. This is the most obvious change made to how Quality Score and Ad Rank are calculated, with Google now taking into account the expected impact that ad formats and extensions will have on CTR and user experience.

Expected CTR. In the 2009 version, Hal says unequivocally that “the biggest factor by far [in determining Quality Score] is clickthrough rate.” In the latest video, the talk is about “expected clickthrough rate”. There’s no explicit discussion about this, but it is clear now that the historical CTR you see in your Adwords stats is now playing a lesser role than it was in terms of determining Quality Score. Factors such as user behaviour, device type and location are all likely to impact on the expected clickthrough rate for a given keyword in a particular situation. Signals Google can pick up about the likelihood of an ad getting a click in the here and now, as opposed to the historical performance of that ad, are becoming more central to Quality Score.

Relative importance of Quality Score factors. In the old video, a handy pie chart shows CTR accounting for around 60% of Quality Score, ad relevance around 30%, and landing page Quality around 10%. In the new video, there’s no such breakdown provided or any indication about what factor is the most important. However, expected CTR is introduced first, followed by landing page experience, with relevance and ad formats bringing up the rear. This seems to suggest a promotion in the influence that landing page experience has on Quality Score.

Calculation of Ad Rank. On his 2009 whiteboard, Hal Varian showed how ad rank was calculated by multiplying numerical Quality Score with Max. Bid. It was very clear to see why one advertiser has a superior ad rank to another. The fancy 2014 graphics Hal uses afford no such clarity, with Quality Score and format impact just given “high”, “medium” and “low” values. This gives rise to what look like fairly arbitrary ad rank values. Of course, one would hope that the values aren’t arbitrary, but it has become a little less clear as to how they are arrived at.

I’m sure that Google could argue otherwise, but my take on the changes seen over the last five years, as illustrated by the differences in these two videos, is that there has been a genuine shift away from transparency in the determination of Quality Score and the mechanisms behind the Adwords auction. Even the names of the two videos hint at this added opaqueness; while “Introduction to” suggests some facts are involved, “Insights into” is a blatant indication that we’re not getting the full story.

Even the accompanying “Settling the (Quality) Score” whitepaper, which looks to be an attempt to give an impression of transparency, fails to give advertisers a comprehensive account of how the auction into which they’re buying is run. Here, Quality Score is likened to a “warning light in a car engine” that is “not meant to be a detailed metric”. This vagueness suggests that factors that the average Adwords advertiser simply cannot see have crept in to the determination of Quality Score, primarily in order for Google to shift the goal posts and make more ad revenue. Google has a wealth of data about what ads and formats will get clicked on the most, so they are continually reengineering Quality Score based on this information to ensure that they incentives advertisers to do what’s best for Google – get more clicks.

At the end of both the 2009 and 2014 videos, Hal Varian makes a real effort to show how the interests of all parties – users, advertisers and Google – are equal in the Adwords auction. But when only one of these parties can see and make the rules, I’d suggest that some of them are more equal than others.



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Edward Culliford Search Star Edward Culliford
Company: Search Star
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