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Google play fair on Pay-Per-Click

Posted by Manley November 15th, 2007

Google is changing the format of Pay-Per-Click AdWords appearing on AdSense sites to reduce the cost to advertisers from accidental clicks. This move looks like it will slash revenue for the search giant. Is Google playing fair at its own cost or is this a shrewd commercial move?

The format of AdSense is changing, so that the clickable areas of adverts are now confined to the title and URL. I have made a mock-up here, showing the old and new clickable areas in blue:

Making it less easy to click on adverts seems to fly in the face of conventional wisdom – AdSense publishers are likely to lose income, at least in the short term, and Google will lose both publishers and revenue. What is in this move for Google?

PPC might not provide the ROI that organic search does, but it is an area of search PR which is very popular with anyone who is accountable for their budget. Only paying for actual clicks allows cheap experimentation with the long tail of search, the ROI can be effectively and accurately measured and the work involved is much less.

As someone who works with organic search I would only use PPC to supplement a good organic search campaign, but it is easy to see why someone who is not a search professional would plump for a more measurable campaign. If you pay, you get a contextual link in the SERPs or publisher’s page and you only pay when you get a click. There might not be as many clicks and the conversion rate might not be as high as with organic natural results, but they can be measured and are generally predictable.

The only danger with PPC is click fraud. Search engines monitor for click fraud, so advertisers do not suffer from it too much, Google and Yahoo! have both voluntarily submitted to click fraud auditing and considerable sums have been paid back in compensation where appropriate, but there is always an element which cannot be algorithmically picked up.

How many times, whilst a page is loading and the browser is happily rejigging the layout of the page, have you accidentally clicked on an advert? I consider myself a more than competent web professional, yet I probably do this once or twice a day. It is mildly annoying for me, but my fat fingers have cost advertisers money.

By changing the layout of the adverts Google is, in a market increasingly filling with competitors, reassuring advertisers that it is doing everything it can to make sure that the clicks which advertisers pay for are genuine, interested clicks with a good chance of conversion. This increased confidence should increase click prices and, whilst reducing the number of clicks, should result in increased revenue for both publishers and the search engine, as well as improving the service for advertisers and cutting out some elements of spam.

Financially, there will probably be very little change. Cost per click is likely to rise, but cost per conversion should fall, leaving publishers (and Google) with about the same income, and providing advertisers with a better audit trail. This move can only appeal to the more conservative advertiser and it is not going to hurt the more astute use of AdWords as a tool to augment proper natural search. Let’s hope that it sets a precedent for more of the same.

Incidentally, this only applies to text adverts. Graphic and Flash ads are still going to be the same as they were.

Tags: adwords, click fraud, Google, online advertising, PPC

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