One common mistake is to try to implement all the bells and whistles on the first day. This very ambitions and aggressive desire may put your account at a great risk. Remember, you are planning to make big changes to your account and search marketing is NOT a simple linear algorithm that acts as you expect.

To mitigate this risk, set your initial expectation to fully switch over to the 3^rd party (or only several campaigns – depends on the size of your test) and achieve the same results/performance you are currently getting. This is especially important when you are switching from your manual bidding or Google Conversion Optimizer* bidding, to a new bidding tool.

Once the account is switched over and stabilized begin to introduce the features / benefits one at a time and tier it by campaigns. I.e. if the first benefit the 3^rd party provides is an account deduplication of keywords, first dedup the less impactful campaigns and watch the account changes. If the changes are positive continue with the same methodology with the higher volume campaigns until the entire account contains unique keywords.  When deduping it is advisable to pause the keywords and not delete them because if it turns out that the wrong keyword was de-duped, it can be fixed with a simple unpause.

Remember, the faster the pace you take with the 3^rd party, the higher risk you expose your company to. Also, the vendor is brand new to your account and it is very possible that their “best practices” are not applicable to your account. It is better to get slower incremental wins, then to have your account performance plummet right at the beginning of the test – then the entire test becomes about saving face and recovering lost profit rather than improving performance (and your management team gets antsy).

The Test in Progress

Measure the success of the test against the milestones established before the test began. Be cognizant of unforeseen issues that were beyond the vendors’ control but make sure to hold them accountable for under-delivering. On the other hand, recognize successes for over-delivery and don’t be shy to ask if they can get more aggressive with the performance goals.

Conclusion of the Test and Future Partnerships

At the end of the day not all tests will succeed (that’s why they are called tests), but being prepared and controlled during implementation will allow you to minimize your losses if it does. However, a successful test can turn into a true partnership where, your account is performing efficiently on higher level than ever before, and the vendor goes out of their way to help you meet your goals and introduces out-of-the-box ideas. To be successful in the long term: be open, have constant communication (ie. weekly/bi-weekly), especially of expectations, and do not let the relationship grow stale or complaisant – make sure that your partner is one step ahead looking out for the next big win.

* If your account uses conversion optimizer then the manual bids set for a keyword are irrelevant, since Google is using its own algorithm. Make sure that when you switch over to a bidding tool, their initial bid for the keyword should be the current (or last X days) of average cpc for that keyword and NOT the manual bid that is overly outdated.

Insofar as an account manager rules the keywords and ads of a pay-per-click (PPC) marketing campaign like a tormenting angel, so too must the bitterly pragmatic advice for a sovereign that Niccolo Machiavelli dispensed in The Prince and other works hold merit.

Though his name now is synonymous with malfeasance, many of Machiavelli’s dicta were fairly mundane: “Whosoever desires constant success must change his conduct with the times,” he wrote. And: “Entrepreneurs are simply those who understand that there is little difference between obstacle and opportunity, and are able to turn both to their advantage.” Who would argue with such sentiments?

Even his more-cynical observations, like “Of mankind we may say in general they are fickle, hypocritical, and greedy of gain” still find currency. In Small is the New Big, for example, Seth Godin said, “People are selfish, lazy, uninformed and impatient. Start with that and you’ll be pleasantly surprised by what you find.”

His philosophy can perhaps be summarized by what I call The Modified Golden Rule: “Do unto others as you fear they might do unto you.’ And it is apparent from even a cursory reading that Machiavelli’s most-renowned works hold much useful advice for the modern digital marketer.

In the opening scene of The Merchant of Venice, friends of Antonio (the title character) ask him why he seems distressed. Is he, perchance, worried about his ships at sea? No, Antonio demures: “My ventures are not in one bottom trusted, nor to one place; nor is my whole estate upon the fortune of this present year. Therefore my merchandise makes me not sad.”

Yet many digital marketers too often are needlessly made sad by their merchandise. Perhaps a word that yielded a few conversions last week gave none this week. Perhaps CPCs or Quality Scores have changed suddenly and without apparent reason.

In this respect, Google’s Bid Simulator (GBS) feature is intended to provide some guidance to help digital marketers maximize their profit. In ‘How to Calculate Profit-Maximizing ROI‘ and ‘Optimal Bidding, Part 1: Behind the Scenes of ‘Google AdWords Bidding Tutorial‘, I showed how the GBS’s estimates can be used to find the profit-maximizing bid for a given keyword. Let’s look at another example.

Consider a word that generates revenue of $5 per click, on average. (Say the ad gets $100 per conversion and the conversion rate is 5%, for example.) The Bid Simulator might provide estimates of the number of Clicks that ad can expect per week at several different possible bids. If so, then it might also give estimates of the weekly Cost expected for those clicks (from which the average cost-per-click can be calculated.) The numbers in the figure are fictitious, but realistic.

The expected weekly Revenue can be calculated from knowing that each click on average, for this particular example, brings in $5. The expected weekly Profit can then be found by subtracting the Cost (that is, Clicks times CPC) from the Revenue. (The numbers above are internally consistent, but might not appear so due to rounding.)

Form the table we can see that a bid of $4.60/click maximizes our profit. To bid lower gives up clicks at a profitable price, thus reducing our profit. To bid higher brings in clicks at too high a cost, which also reduces our profit. In fact, by modeling the relationships of ‘Clicks vs. bid’ and ‘CPC vs. bid’, we can calculate the expected weekly Profit at any individual bid, not just the limited options the GBS provides.

In the figure below, we can see the expected weekly Profit for any bid:

We see that a bid of $4.60 per click maximizes our profit. (This is why Hal Varian, Google’s chief economist, refers to the profit-maximizing bid as the ‘optimal’ bid.) To bid more reduces our expected weekly profit such that, at a little over $6.00 per click, we will make no profit at all (and to bid even higher will cause our expected profit to become negative).

But in a cutthroat bidding environment, it might sometimes be wise to settle for less profit for ourselves if it will hurt our competitors more. I call this concept ‘maximization of relative benefit‘.

Look closely again at the ‘Profit vs. bid’ graph. The profit-maximizing bid nets us, on average, $317.50 per week. But if we bid a little over $5 per click, we will still net a profit of around $300 per week. Our profit will be reduced by $17.50 (a bit over 5%), but the next-highest-positioned competitors will see their CPCs rise, in any auction in which we both participate, by $5.00/$4.60, or about 9%, regardless of their Quality Score.

Even in the worst case (that is, an ad which never converts for us and therefore brings us no revenue) our ad still occupies space, robbing your competitors of precious clicks. Thus, for one who values the pain caused to competitors more than the price paid to get that traffic, it is worthwhile to bid even for a non-performing term.

For ads that do generate business, the economics are even more compelling. Bidding slightly above the profit-maximizing level:

1. increases the CPC for the next-highest competitor (for a single ad auction)
2. reduces the number of clicks competitors are likely to accrue (for a collection of ad auctions), and
3. nets you more clicks (even though they are at an incremental price above which you should be willing to pay if you were a strict profit-maximizing bidder).

Regarding the second point, of course, there might not be a one-to-one relationship between the number of additional clicks you receive and the number your competitors lose, since your change in bid might, for example, make Google alter the number of ads they show and therefore the total number of clicks the paid listings receive. (I explained this effect in ‘Pay Attention to the Man Behind the Curtain.’)

In the graph below I have calculated the effect of small increases in one’s bid over one’s profit-maximizing level for the cases where each additional click we gain takes 0.00, 0.10 or 0.25 clicks from the next-highest-positioned competitor. (This analysis assumes that there is a next-highest-positioned competitor and that that competitor get the same amount in revenue per click, on average, as we do.)

Even when our higher bid takes no clicks from the next-highest competitor, it still drives up their CPC. For a bid only 5% above our profit-maximizing bid (in this case, $4.83), our expected weekly profit drops to $314.65, a loss of less than $3 per week to us. However, it costs our next-highest-positioned competitor about $11 per week (an extra loss of about $8 above our loss). If we increase our bid by 10%, we will sacrifice about $10 per week, but cost our competitor about $18. These amounts might not seem large, but if our competitor loses 0.25 clicks for each additional click we gain, then his loss should average about $30 per week, for a word that, if his economics are similar to ours, would otherwise generate over $300 in profit. That’s a nice chunk of his profit and perhaps sufficient to harm his overall marketing efforts if done on a wide enough array of words or on waves of carefully selected terms.

(This concept differs from so-called ‘vindictive bidding’ in that being vindictive involves bidding the highest amount possible to achieve our profit-maximizing CPC. But ‘relative benefit maximization’ involves aiming for a target CPC above our own profit-maximizing level simply because, for small bid increases, doing so hurts our competitors significantly more than it hurts us.)

In The Merchant of Venice when Antonio fails to pay his debt, Shylock demands a pound of flesh as compensation (and for this Shylock is regarded as one of Shakespeare’s cruelest villains). But we can see that for the example above, exceeding our profit-maximizing bid (up to a certain level) can hurt the next-highest advertiser’s profit worse than ours.

Even bidding just $0.05 (about 1%) over our ‘optimal’ bid cuts his profit noticeably while hardly affecting ours at all. So, while Shakespeare wished for his audience to hold Shylock in contempt, judging from the particular circumstances in this case by seeking only one pound of flesh, in my opinion, Shylock underbid.

Done properly, bidding to maximize one’s relative benefit can be a useful part of driving competitors out of a given set of keywords (or, with luck, out of a given market completely). Perhaps Machiavelli put it best: “If an injury has to be done to a man it should be so severe that his vengeance need not be feared.”

According to Google’s official blog:

The broad match modifier is a new AdWords targeting feature that lets you create keywords which have greater reach than phrase match and more control than broad match. Adding modified broad match keywords to your campaign can help you get more clicks and conversions at an attractive ROI, especially if you mainly use exact and phrase match keywords today.

To implement the modifier, just put a plus symbol (+) directly in front of one or more words** in a broad match keyword. Each word preceded by a + has to appear in your potential customer’s search exactly or as a close variant. Close variants include misspellings, singular/plural forms, abbreviations and acronyms, and stemmings (like “floor” and “flooring”). Synonyms (like “quick” and “fast”) and related searches (like “flowers” and “tulips”) aren’t considered close variants.

For more on how this announcement could impact your PPC campaigns, check out Alex Campbell’s blog on the topic, entitled “AdWords +New +Matchtype.” In the post, Alex discusses how Google’s new matchtype may help PPC-ers improve their spending efforts, by “filling the gap between the oh-so-broad Broad match and the nitpicking Phrase match. A gap which anyone working in PPC will be excited to see filled.”

What are your thoughts on this new matchtype?  How will you be applying it to your AdWords campaigns?

Letting an outsider into your account is a very sensitive thing to do, it requires very careful consideration and it is important to take your time with the due diligence – your company depends on it. Going into it, look for a vendor that can be a true partner where the goal is to establish a win-win relationship.

Preparing to choose a third-party provider

Before looking for a 3^rd party tool and/or provider, make a list of what your needs are going into the search. At minimum this list should consist of features and benefits broken into must-haves and like-to-haves, and most importantly the end goal you are trying to achieve. This is extremely helpful when you get on the sales calls and you get a lot of bells and whistles thrown at you – using your original list you can check off which criteria the 3^rd party meets, stay true to your basic needs, and you can add a comments section of “extra features” (that you can use as a tie breaker).

Browse the web for reputable service providers by listening to webinars, downloading white papers and case studies to understand who the players in the field are, and where their expertise lie; if possible ask business partners for referrals, but make sure to measure them as objectively as the others.

Interviews / Sales Calls

Remember that this is an interview exercise in which you are evaluating whether to hire the people on the other end of the line. Do not be shy to ask the hard questions and pay attention to the finest details. Also communicate all your expectations to the team and understand how they intend to meet or exceed them. Have one sheet for each vendor that lists the criteria that are important to you (from the previous section) and take notes on how each one meets your needs.

Some factors to evaluate include but are not limited to:

• Technical capabilities – does the company provide a technological solution that would not only support your campaigns, but take it to the next level?
• Human factor – do you click well with the team, and feel that you would be getting the level of support that you need? Do they sound like leading experts in their field?
• Aligned Goals – do they “get” your business model and understand what you are trying to achieve? Do they provide further insight into future opportunities?
• Implementation Timeline and execution – Exactly how will implementation take place? What will be the resource requirement from your own tech team? What is the timeline for full implementation? When can you expect results? Is there a backup plan / low risk option / 30-60-90 days-out clause? What are the expected success factors in this time period? Set the expectations of the level of engagement you will want to see during this test, and after.
• Fees – learn about the different pricing options and which works for you: flat fee, % of spend, % of profit, CPA deal etc. Will the vendor take any risk onto them?

Once you interview the service providers, objectively compare your sheets about each provider against your criteria and finally choose a “winner”.  Upon selection, make sure to work with the vendor to establish clear milestones with hard numbers to objectively evaluate the test – it is important that these goals are realistic and take into account projected seasonality (if applicable).

In part 2 of this post, I’ll take a look at the keys to implementing an engagement with a new SEM agency or technology solution.  In the meantime, please leave a comment and let me know what tips you have found to be most helpful in choosing the right partner.

This relationship frequently pops up in situations dominated by a ‘power law distribution’, that is, when many entities have (or contribute) little individually, a moderate number have moderate impact, and very few entities are highly important.  This is what search marketers typically see in their ‘head’, ‘body’ and ‘long tail’ keywords.

If 20% of ad spend generates 80% of conversions, then it’s reasonable to ask if it’s possible to get 80% of that result (about 64% of conversions) from only 20% of that level of spend (about 4%). Similarly, perhaps it’s possible to get 80% of those results (about 50% of conversions) from only about 1% of the spend. Which equation yields 80% when the input is 20%, yields 64% when the input is 4%, and so forth? Mathematically, it is written Conversions = Spend^n and it’s straightforward to show that this equation describes Pareto’s relationship when ‘n’ is the base-p logarithm of (1-p), where p = 0.20:

In case the presence of a logarithm in an equation is giving you the cold shakes, remember that it’s just a decimal number. For the 80/20 case, it is about 0.13.

All this says is that, if Pareto is right for digital marketing, then the best-performing keywords that account for 50% of our spending should yield about 91% (0.5^0.13) of our conversions. To check this, I generated for various accounts a list of the keywords (treating each keyword’s matchtype as a separate entity) that have gotten at least 1 click in the 3-month period between March and May 2010. (I considered only words in Google’s Search network, not the Content network nor other search engines.) I sorted the list from those that got the most conversions per dollar to the least. I also calculated the total amount spent by all of the keywords and the total number of conversions that they produced. I was then able to calculate, for each entity, the cumulative fraction of money spent by that entity (and all the entities above it on the list) versus the cumulative fraction of conversions generated by that entity (and all the entities above it on the list).

First I considered a company that manages high-end rental real estate in major markets in the US. It turns out that, for this account, the ’80/20′ Rule is actually much closer to the ’70/30′ Rule (where p=0.30 and 1-p = 0.70):

For this account, 97.5% of all the spend was in words that generated at least 1 conversion. Considering only the conversion-generating keywords, we see that the ’70/30′ Rule (actually, to be more precise, the ’71/29′ Rule) is a very good representation of the relationship between Conversions and Spend. That is, the most efficient words generated about 1% of the total spending and 25% of the total number of conversions. About 10% of the spend generated about 50% of the conversions. And about 30% of the spend generated about 70% of the conversions.

An almost identical relationship was seen for a builder of new homes and for a seller of international calling cards in the US. Overall, 30% of the spending accounted for 70% of the conversions. However, among non-brand-related terms, the relationship for both of these accounts followed the 60/40 Rule, 40% of spending accounted for 60% of conversions.

The 60/40 Rule is commonly seen among non-brand terms, especially in very competitive industries with thin margins and little brand loyalty, such as was seen with an online retailer of movie tickets and a seller of gold bullion. Perhaps one measure of the strength of a company’s online brand is how much deviation brand-related terms introduce compared to when they are omitted from this sort of analysis.

The fraction of conversions generated by the best-performing non-brand keywords often follows the ’60/40′ Rule, equalling about the square root of the fraction of money spent on them. (This relationship has been noted before by Alan Rimm-Kaufman who in turn was quoting others.) Deviations from this rule might be due to budget limits artificially curtailing the performance of best-performing terms. If the performance is closer to the 80/20 rule, this sometimes signals an overdependence on brand-related terms.

As another guideline, you should generally see about 90+% of your spend in words that have generated at least 1 conversion in past 3 months. If more than 10% of your spend is in words that have not generated a conversion in the past 3 months, there might be a problem with the structure of your account, your bidding, or your data tracking. Whether you call it the ‘Pareto Rule’, the ’60/40 Rule’, or the ‘Square Root Rule’, though, the underlying principle is the same.

I stand by that position… all else being equal. But in the time since that posting, we’ve uncovered some strong evidence that there may be another variable in the equation that can under certain circumstances trump even the almighty CTR. That variable is none other than Father Time. It appears that sometimes the best thing you can do to improve Quality Score is absolutely nothing.

Here’s a quick outline of what we’ve seen and done in recent weeks:

1)      Before we took over management of an account from one of our clients, the client had built out a number of geo-modified ad groups around important keywords.

2)      The fundamental structure of the “legacy” geo campaigns was sound.

3)      As part of our ongoing expansion and optimization of this account, we continued to add new geo-modified campaigns structured in the same way as the legacy versions, with ads that were also fundamentally the same, with only slight alterations aimed at raising CTR.

4)      After a few months, we were puzzled by the results, which looked like this:

In other words, despite identical structure and setup with similar ad formats across all geo sets, AND despite CTR being more than 50% higher with the new set, Quality Score remained 50% higher for the legacy set.

As confounding as this was – and as tempting as it is to throw our hands up and walk away any time we come across these kinds of seemingly arbitrary Quality Score issues – we dug deeper.

As stated above, the structure of the ad groups was identical: each ad group in both the old and new sets was a single keyword concatenated with a large list of geographic names. Landing pages specific to the “thing+geo” combination were used for each individual keyword in both sets, and there was no difference in landing page design elements. In other words, the only thing we could think of that was different in any potentially notable way was the ad copy.

So this is what we did:

1)      Analyzed the editorial differences between the ads running in the two sets. As mentioned above, they were fundamentally the same, but ultimately they were not exactly the same. These were the three key differences that we found in comparing the ads in the legacy ad groups to those in our newer ad groups:

1. New ad groups used Keyword Insertion somewhat more often than old ad groups.
2. New ads used customized Display URLs (e.g. Website.com/SpecialThing), while old ads used a single, generic Display URL (www.website.com) across the board with no exceptions.
3. The client in question has coverage in a wide variety of verticals, and the way we expressed that in the newer ads that we’d written was something to the effect of “Find What You’re Looking For”; while the old ads expressed this by saying, “Find the details of [xyz] at website.com.”

2)      We isolated 3 different cross-sections of newer geo-modified ad groups, and applied one “legacy element” to each set. So in one cross-section we got rid of Keyword Insertion; in the second one we eliminated the customized Display URLs; in the third we changed the wording of the “find it here” message to match that of the legacy group.

1. Results: CTR, Quality Score and CPCs took a nosedive across the board.

3)      Not giving up, we stretched a little bit further and hypothesized that maybe there’s something about the “alchemy” of those 3 distinguishing elements in combination that led to a better Quality Score. So we took the 3 test sets we’d been working with and applied all 3 differentiators to all 3 sets.

1. Results: CTR, Quality Score and CPC took an even bigger nosedive.

4)      We reverted all of our test sets back to the ads that we had written, which pushed CTR back to its higher levels, and we’re basically crossing our fingers and hoping that the better CTRs will eventually translate to better Quality Scores and lower CPCs. We’ll see.

To be fair, this wasn’t an entirely perfect test. As mentioned above, the client in question here covers a variety of verticals; and as we all know, different types of searchers in different categories respond differently to different types of messaging.

However, the way we set up the tests should have accounted for that to a good degree. We tested a very diverse cross-section in each test set, and when comparing our core test metrics (CTR, QS, CPC), we only did so within each category individually. Still, in all cases, each set had degraded in QS and click metrics within a few weeks after making each round of changes.

So what’s left to test?

Time.

The geo campaigns that were already there when we took over the account had been around for months and in most cases years, humming along unwatched and untouched, delivering efficient traffic at a solid CPC. Then we came in, expanded the geo campaigns to cover more keyword areas, wrote the same kinds of ads with slight variations that led to better CTRs… and in the process killed Quality Score.

In short, aside from any sort of variables that we simply can’t perceive (“dog-whistle variables” I like to call them), it appears that the only major difference between the legacy geo campaigns and the new geo campaigns in this account is that the older ones are, well, older. I can’t explain why, but if there’s any validity at all to our testing methodology, it appears that the AdWords Quality-Score algorithm does indeed favor ad-keyword combinations that have been together for a long time. (Has Google, as a side-effect of its myriad revolutionary advancements in search technology, managed to quantify trust?)

It’s a tough conclusion to communicate to a client (is there anything about Quality Score that isn’t?). You are asked, “What do you recommend we do this month to improve Quality Score in our campaigns?” Depending on the circumstances, it appears that your best answer may very well be, “Absolutely nothing.”

First, let’s define overspend as the additional cost incurred that exceeded a campaign’s set budget.

Now how does overspend occur?

Well, we had to dig a little deeper and used Google’s policy as a reference.  For starters…”If Google over-delivers your ads too much, and you accrue more costs in a billing period than your budget allows, a credit will automatically be applied to your account.” And “Over the course of a single day, you may change your daily budget for each campaign in your account a maximum of ten times.”

What’s not clearly defined above is which budget is being measured for overspend? Daily Campaign Budget? or Total Monthly Budget across all Campaigns?

Additionally “…if you change your budget halfway through the day, you’ll typically spend 50% of your old budget in the day’s first half and 50% of your new budget in the day’s second half…Please note that if demand for your ad is greatest early on the day you make a budget change, AdWords might deliver (for instance) 70% of your first budget in the morning, and then 50% of your second daily budget in the afternoon…if you change your daily budget multiple times in a given day, AdWords will serve your ads based on the highest daily budget amount you chose for that day.” In other words, per Google’s increments and referencing the table below, if your Original Budget was set at $10,000 at Midnight (when AdWords billing begins) but then adjusted to a budget of $8,000 at noon of that day (commencing the second half of the day) you would incur a 10% ($1,000) surplus of the Original Budget which falls in line with Google’s  20% more clicks disclaimer.  However, this overspend jumps to a 38% ($3,000) surplus when compared to the adjusted “new” budget that was edited at noon:

What is more troubling is that the “70%” (per Google) isn’t a hard number and is simply referred to as an example, therefore what if this number was 85%?  See below for an example of how a fluctuating interval can introduce spend above the stated 20% allowance:

This can present challenges when trying to optimize CPC/Bid management, especially if the amount used to make suggestions is the newly inputted daily budget (i.e. the number you see within Google MCC at the end of the day or the next day).  Therefore it may be of value to document what/when budget changes are being made to your campaigns when considering making Bid changes.

Lastly, and arguably most important, Google’s policy suggests that if budget changes are made, they must be of a value higher than the last highest budget for the day.  Simply put, although you can make multiple budget changes daily, (up to 10 max) ads will be served based on the highest budget entered on that particular day.  Therefore, if you have clients or your own campaigns that are budget sensitive, and you anticipate having to make adjustments, it might serve you well to start off the day conservatively.

Merchant star ratings from Google Products will now be displayed under the advertiser’s URL.  Here is an example:

Clicking on the link to the 1,967 reviews takes the user to the merchant’s page on Google Products:

Google has given Sierra Trading Post a merchant rating of 4.7 out of 5.  Google calculates a merchant’s rating based on an aggregated collection of reviews from a variety of sources including re-sellers, product comparison sites, review aggregators, and Google checkout.

Merchant ratings could become an important differentiator on non-brand keywords or searches for popular items.  For example, this search for [computers] puts Dell and HP at the top and both have a rating of four stars.  Could a consumer be influenced by the fact that Dell has 6,000 reviews compared to 760 for HP?:

Some important points about this new feature which Google is referring to as “seller rating extensions” as outlined in the AdWords blog announcement:

• Only online stores currently rated in Google product search will be included
• Merchants must have an average rating of 4 stars or higher
• And have at least 30 reviews
• Merchants will only be charged when users click on the headlines.  Clicks to the reviews will not be charged.
• Merchant ratings will only appear to English-language users searching on Google.com
• Only ads that are targeted specifically to the U.S. will include the merchant ratings.
• You do not need to opt into this product.  If you meet the requirements, the distribution is automatic.
• Unlike other ad extensions, if you want to opt out of Merchant Ratings, there is a separate form that needs to be submitted.

This could be a great opportunity for online retailers to leverage their positive customer sentiment and stand out from the crowd.  Beyond what Google outlined in their blog post, there are some subtle nuances to be aware of:

• Google can include the seller rating extensions on any type of search.  In other words, if Sierra Trading Post were to advertise on their own brand {Sierra Trading Post},  a brand they carry {Columbia sportswear}, or a general keyword like {men’s hiking boots}, Google would include their merchant rating below the ad copy.
• From our research, we have not seen merchant ratings appear with any other ad extensions.  For example, if your ad includes sitelinks or product plus boxes, your merchant ratings will not appear (and vice versa).

Since this a very new product that we have little control over, we are still developing our best practices and, most importantly, we are monitoring our data to gauge the impact.  Here are some tips to consider in evaluating it for your campaigns:

• Take a look at your reviews and your competitors’ reviews.  Are they positive? How many reviews do you have versus your competitors? What is your rating versus competitors?
• Watch your metrics closely to see how this change impacts your performance.  How is this impacting your CTR and conversion rate?
• Place a renewed focus on reputation management.  With this new feature, you need to focus not only on getting reviews on your site for the brands you carry, but on the web for your online store, itself.

While this is an exciting change with great potential, we do have some concerns:

• Advertisers don’t get charged for the clicks on reviews/rating hyperlinks, but these links also take potential customers away from your landing page and out of your designated conversion path
• If our initial observation that you can’t serve all extension types at once is correct, you’ll have to test which extension, including Merchant Ratings, will bring you better results.
• Your competitors’ ratings are appearing right next to yours, even on your own brand terms.  How will it impact you if your competitors have a better rating, or more reviews?
• There are so many ways for your paid ads to stand out now – product plus boxes, Google checkout, Sitelinks, one-line Sitelinks, vertical image listings, location, etc. – how much will Merchant Rating differentiate you?
• What does this mean for comparison shopping engines?  They often supply many of the reviews that go into the merchant rating, but they are not eligible to show a merchant rating of their own.  This seems to put the comparison shopping sites at a disadvantage compared to direct retailers.
• Will we see any reporting on clickthroughs to the reviews page though Google Analytics or AdWords?  This data would really help in measuring the impact of this new feature.

My first thought was that this new feature would improve CTR for retailers with high ratings and lots of reviews.  But it could end up reducing CTR by diverting traffic to the review page rather than our landing page.  Will those customers ever come back?

What effect do you think this will have on your accounts?  For online retailers with positive ratings, do you think this will improve CTR and conversion rate? Or just get lost in the even-more cluttered search results page.

The first feature that grabbed my attention is called “Something Different” on the new left hand navigation.  The choices here make a lot of sense for someone doing an informational search on this term.  As do the “searches related to chocolate” on the bottom of the page.  When it comes to upper funnel or broad keywords that are informational in nature, these are quite helpful.

However, the big miss here is that these types of features are not “one size fits all” and that is where I believe Google and their engineers are stepping into unfriendly waters.  When I do a lower funnel search for a brand term, I think these features are less relevant, distracting, and in some cases inappropriate.  Here is a brand search I did on the term Nike:

As a brand marketer the results are incredibly shocking to say the least.  If I am Nike and I spend hundreds of millions of dollars building up my brand and then when a consumer does a search for my brand, Google displays all of my core competitors on the page, I am questioning the logic.  The beauty of search is access to information based on a stated intent.  If I ask for Nike, I am pretty far down the search funnel; in other words, I am not doing a general information search for shoes or athletic apparel and I am not looking to compare brands of running shoes.  I am very specifically honed in on a brand and not looking for something different.  Put another way, I raised my hand and said, “I want to see Nike” and don’t expect to see Reebok, Adidas, New Balance, Puma and Converse.  Taken one step further and applying logic, the list of searches related to Nike at the bottom of the page should really include Converse and not Adidas because Nike now owns Converse so they are related.

Another new feature is called “Pages similar to” which is based on the root URL of the search term and shows up at the bottom of the SERP.  Let’s take Honda for example:

Honda is similar to Acura, Ford, Nissan and Toyota?  Well I will give you Acura, which is owned by Honda, so that is similar.  The rest sell cars, but the similarities really end there.  Remember, I searched for Honda, so I was already focused on a brand.  A lot of marketing dollars were spent to get me to enter that into Google.  I was not looking for Toyota at that point and if I was I might have included a term like “companies like Honda”.

What is even more interesting to me is this feature does not show up on all car manufacturers.  When I searched for BMW, Mercedes, and Saab, this feature did not appear.  I am sure if you gave brand advertisers the choice, they would opt out of this and all comparison features on their brand term.

This is just one example of where a brand is getting pitted against their competitors, the same is true of GAP, Ford, Polo, Tide, Gillette, and the list goes on.  Now these features are suggestive in nature and meant to be helpful, but if I am spending millions of dollars building my brand, the last thing I want to see on my search results is my competition.

So what is going on here?  Is this a good user experience?  What should brand advertisers, who have helped fund the growth of Google over the past decade, do about these new features?  These are all good questions that Google will need to answer for advertisers who want a clean search results page that is devoid of competitors.  For now, advertisers have to play ball with Google because that is where the volume of traffic is.  As other options become more viable, I do believe Google is playing with fire.

We contacted our Google representative to get some more specifics on this latest addition to the sponsored results.  Here is their official response to our questions:

Google:  “We’re always experimenting with new features and tools to help users find information online. We’ve recently enabled a feature on English language versions of the Google search results page in which additional advertisements for related queries or refinements of the user’s original query may appear. This feature provides users with a diverse set of relevant ads, and offers advertisers with relevant broad match keywords another opportunity to reach their target audience.”

TSA:  I am seeing “Related to” headers on the right hand side sponsored links, what are these?

These headers are related commercial refinements and are part of an experiment we are conducting on Google.com.  They are based on common user refinements for queries taking both search and ads signals into account.   We are experimenting with serving ads that are most relevant to those refinements.

How are ads served under these headers?

Ads that appear under these refinement headers are targeted based on relevant broad match keywords in an advertiser’s account.

Am I being charged for clicks under these headers?

Yes, you will be charged according to the standard CPC auction model if a user clicks on one of your ads.

How can I make my ads eligible to appear under these headers?

All ads for broad matched keywords are eligible to appear under these search refinements.

I want to extend our thanks to Google for helping us to keep up with their ever-changing search results page, and for allowing us to share this information with our readers.  Interestingly, this doesn’t appear to be the end of the story.  I ran a couple of searches this morning, and found some additional examples of these “related to” advertisements, along with yet another new feature:

Based on my search for [padres], Google is using the “related to” feature to serve additional ads based on relevant queries – [padres tickets], [Petco Park].  Now they are also including links to related queries under the heading “Also try.” 

Here is another example in which Google serves me the “Also try” links, this time without any advertisements:

In May, Google made a number of changes to its standard results page, including the addition of related queries on the left-hand column under the heading “Something different” and at the bottom of the page under “Searches related to [keyword]”:

So adding links to relevant queries is not new.  But as far as I can tell, the “Also try” feature is the first time Google has used the right-hand column – the part of the page which had always been reserved exclusively for advertisements – to serve me additional, relevant queries.

When it comes to search, the only thing you can count on is that nothing will stay the same.  What are your thoughts on these latest additions to the Google results page?