Andrew Goodman is clearly one of the most informed and deepest thinkers on the insides of Adwords. His comments on the recent changes are worth reading and thinking about. I particularly like the way he defines assumptions as to why they’re making these changes:
1. New advertisers (and unevenly-engaged advertisers returning to refresh their memories) do keep pouring into the space, especially internationally. The optics of high minimum bids don’t look good. They’re alarming and off-putting to newbies.
2. Google likes its black box, and likes to avoid black-white distinctions. Building very flexible (read: confounding) architecture helps Google achieve a number of goals. And even those goals are subject to change.
3. Yet Google faces pressure for additional disclosure. So for every layer of complexity they build in, they try to offer up at least an equivalent step forward in terms of disclosure.
4. At Google AdWords, CTR is king. Clicks drive revenue, and continue to be a reasonable proxy for relevance. This is the biggest constant since 2002.
5. The platform as it stood at version 2.6 (my nomenclature), contained pockets of inefficiency. It did a good job of ramping up the “quality” bar, to the delight of users, but as even Sergey sheepishly admitted to investors, they might have “overtightened” the calibration of the platform, showing too few ads for advertisers’, Google’s, and investors’ taste. The new release is intended to offer Google the ability to “untighten” selectively, without giving anyone the satisfaction of being able to point definitively as to exactly how that is being achieved.