Commentary

The Google Grinch That Could Steal Christmas

Last week, Gord Hotchkiss wrote about the interesting testing Google is conducting in search results pages.  Today, I'd like to make some speculations about this development.  A friend sent me a screenshot two days ago that had no right-hand ads.  I brushed it off as something weird with her settings.  I did notice she had Instant turned off and it was only occurring on her searches in Chrome.  My initial thought was there would be no way this would ever roll out.  It would be revenue suicide in Q4... or would it?

Working with several large ecommerce clients, I've found an uncanny urgency to SEM in November and December.  A poor Q4 in search can be devastating to a business.  What would you do if all of a sudden your ads that were strategically positioned with an average rank of 4 in order to deliver optimal ROI just stopped serving?  Would you accept the fact that you cannot get those sales efficiently -- or would you enter a bidding race to get to the top?  Once there are fewer advertisers on the page, these terms probably will perform better for you -- but just how much will it cost?

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This has to be quite alarming to small and medium-sized companies reliant on search.  What if the big brands reach into their deep pockets and see it as an investment?  If cost per click skyrockets, then Google could make out very well in Q4; however, some businesses would suffer.

You have to take a step back and look at the user experience.  What Google is testing here presents a much cleaner page, and assumably a better experience.  The limited real estate available to paid search advertisers will require them to step up their game and strive for the best relevance, click rates and conversion rates.  Quality Score optimization is only a part of it, though. The average rank formula is: 

Average Rank = CPC Bid * Quality Score

Now, cost per click may go up, but so too should click rates, maybe even enough to offset the bid increase.  Conversion rates should climb, too, as the competitive landscape lightens, so higher click costs may even be completely justifiable. 

But what happens to those companies that do get pushed out?  Is there potential backlash from consumers towards Google if a change in the search results page drives companies out of business after a devastating fourth quarter? 

While the verdict is still out and this testing is in its infancy, advertisers cannot afford to wait. In the meantime, I recommend pushing your limits and trying to conquer those top spots now.  It's the holiday season and conversion rates and cart sizes are already on the rise.  Focus now on setting the bar for Quality in your category and buckle up for an exciting ride.  I love working on Black Friday and Cyber Monday -- and I'm ready for whatever Google throws our way.

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Editor's note: Yesterday's Search Insider was mistakenly bylined Derek Gordon. The error has been corrected, and Rob Griffin now gets full credit here.

Opportunities For Search Insiders: MediaPost has a limited number of opportunities for columnists who write intelligent commentary on search trends, and/or how-to pieces on SEM and SEO. Please see our editorial guidelines here, and then send pertinent info on credentials, plus one column idea, to pfine@mediapost.com

5 comments about "The Google Grinch That Could Steal Christmas".
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  1. Suzanne Sanders from S2 Advertising, November 23, 2010 at 11:10 a.m.

    ROI with advertising works best with a media mix. Always has always will. Best not to ever put all your eggs in one basket! Think CPM.

  2. Christine Johnson from Marketing Consultant, November 23, 2010 at 1:12 p.m.

    Talk about an article that is completely out in left field. There is no logic at all to Landis' supposition. She doesn't seem to understand Google's revenue stream or basic testing procedures. Google has never shown irresponsibility to its advertisers with its testing and we shouldn't expect that to change in this holiday season. Landis has no insight into how widespread Google's beta tests are, but shows she shows no restraint in spreading fear of a doomsday with no facts. Landis clearly missed her calling to become a news anchor on Fox News with her weak hypothesis presented here.

  3. Rob Griffin from Almighty, November 23, 2010 at 5:06 p.m.

    I find a much larger concern over aomething my Analytics team pointed out - Google Instant page preview is dinging servers and mucking up tracking. Now that needs to be addressed, especially in Q4.

  4. Janel Landis laravie from Chacka Marketing, November 23, 2010 at 9:25 p.m.

    @Rob I hope you are writing about it!
    @Christine "Google has never shown irresponsibility to its advertisers with its testing"....Seriously, first thing that comes to mind is expanded broad match, it's terrible! It took like 2 years for them to come out with modified broad as a control mechanism.
    @Suzanne Tru Dat on the mix, but long live the CPC! ;)

  5. Christine Johnson from Marketing Consultant, November 24, 2010 at 1:21 p.m.

    Ms Landis-Laravie, you seem to be struggling to understand what a beta test is. Do you understand the definition of a beta test? If not, perhaps you shouldn't write about beta tests.

    As I stated before, Google has never initiated a beta test that has caused significant harm to advertisers and you submitted nothing in return to refute this. Name a beta test conducted by Google that damaged advertisers. The expanded broad match issue you speak of was a rollout and for those that understand how to apply negative matching intelligently, it wasn't an issue. So try again to grasp at straws with your flawed logic, but until then please harness your fear-mongering of the world collapsing.

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