Google to reverse minimum bid and introduce dynamic quality score

The Google Adwords blog has announced a number of “quality score improvements” (debatable use of the word improvements!) which will come into play for your Adwords listings in the near future.

Removal of min bid – Firstly it is removing the current system of allocating each keyword a minimum bid amount which must be met for you keyword to appear in the paid search listings. All listings will have the chance to appear on whatever keywords they wish with just quality score and max bid amount dictating the position of the listing (essentially a move back to the old system prior to min bid being introduced). The minimum bid system is to be replaced with a CPC estimate for your first page bid, that is, the bid amount Google estimates it would take to get your ad on the first page.

Dynamic/search query level quality score – Secondly the quality score system is going to be changed so that it is allocated at search query level rather than keyword level. This means an advertiser bidding on broad match phrase loan, will have a different quality score on the term secured loan to personal loan and the phrase loan itself. Also accounting for user data such as location (based on IP and Google account details).

What does this mean to Google?

More search listings!- These changes should see the appearance of an increased number of listings on any given search phrase. With people able to appear on any keyword they wish (so long as they are willing to pay) and a large number of previously inactive keywords will suddenly come into play. 

More money! Essentially what Google are saying is, “You want to appear? Fine, but it’ll cost you!” and I’m sure many advertisers will pay that money….to begin with. Much like the changes in trademark bidding my prediction is a flurry of activity before things die back down and things return back to normal

More competition and increased CPCs! Linked to the above point, by telling people what it will cost them to appear on first page Google are prompting people to increase their bids to get the exposure. If an advertiser is appearing on the second page and sees that they could be first page for an increase of £0.20 CPC, there is the temptation there for them to make that increase which they may not have previously done. Once this temptation is there for every advertiser the whole market for first page listings should become more expensive.

What does this mean to advertisers?

The return of the long tail – Although it has remained beneficial to have a long targeted keyword list for a lot of advertisers the broad match system has allowed them to be relatively lazy. The inclusion of quality score at a search phrase level will mean that it will become much more important in terms of an increased QS and a reduced CPC to have all relevant keywords in your account

Increased brand term CPC? – This ties in very nicely with the removal of brand term protection a few months ago. The function that stopped this from being a long term issue was the minimum bid. Competitors were struggling to make the most of the changes as they were blocked by not having a high enough bid. With the latest announcement this has been removed. So although people will be forced to pay more to bid on a competitors brand, they will not be banned completely, probably producing the same surge in brand CPC as last time (approx 130%) which would equate to a 169% increase since the beginning of the year!

Higher first page CPC – As touched on in the section on Google the likely hood is that these changes will produce more competition for first page listings resulting in higher CPCs. By allowing people to see what it will cost them to appear on the first page you are giving them the push to bid to that level. Some will shy away and save their spend, to others it will be the carrot they need to make the next step.

The changes are set to be rolled out to “a very small set of advertisers” in the next few days according to Google but make sure you keep an eye on your campaigns as I expect the full rollout will follow on from this soon after.

3 thoughts on “Google to reverse minimum bid and introduce dynamic quality score”

  1. The change in quality score is just what many advertisers wanted. I am concerned about the impact on avg CPC for first page listings. The model appeals to the heavy weights in advertising and may be a bad thing for small players such as contractors.

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