google's shrinking ad real estate by andy taylor

#SMX #11B @PronouncedAhndy

Google’s Shrinking Ad Real Estate


Auction Recap


First Page and Top of Page Minimums

‘To be eligible for a top spot, your Ad Rank needs to meet a minimum threshold…As a result, the cost-per-click (CPC) when you appear above search results is generally greater than the minimum Ad Rank to appear beside search results.’

- Google Documentation

‘Only ads with sufficiently high rank appear at all.’ - Hal Varian Insights on the AdWords Auction


First Page and Top of Page Minimums

Source: As seen on http://adwords.google.com/support/aw/bin/answer.py?hl=en&answer=87411; 10/14/2010

Explanation that has since been removed from Google documentation:


First Page Minimum

15

20

8

5

Imagine 3 Ads Get on the Page

Without a First Page Minimum CPC,

the Advertiser in the 3rd Position Pays Just Enough to Beat the Ad Rank of the 4th ranked Advertiser


First Page Minimum

15

20

8

5

Say Google Decides that the 3rd Ranked Advertiser Needs to

Have a CPC of $0.75 to Reach the First Page

With this First Page Minimum CPC, the Advertiser in the 3rd

Position Has to Pay $0.75

Google First Page Min. CPC = $0.75


First Page Minimum


Top of Page Minimum

15

20

8

5

Without a Top Ad Placement Minimum

CPC, the Top Advertiser Pays Just Enough to

Beat the Ad Rank of the 2nd Advertiser



Top of Page Minimum

15

20

8

5


With this Top of Page Min. CPC, the Advertiser in the 1st Position Pays $1.90 to Show Above the Organic

Results

Imagine a Top of Page Minimum CPC of $1.90 for

the Top Advertiser

Google Top of Page Min. CPC = $1.90


Top of Page Minimum


Bid Simulator Data Exposes Impact of Top of Page Minimums


An Andy with Hair Intermission…


Google Year-Over-Year Growth

Google Click Growth Stalling

Source: Merkle|RKG Digital Marketing Report, Q1 2015


Google Year-Over-Year Growth


CPC Growth Accelerating


Seen Across the Industry

Source: iProspect Quarterly Report: Paid Search Trends, 2015 Q1


Firefox Deal Moved Some Search Share, but Not Much…



Google.com Impressions in Decline



Impressions Still Down Taking PLAs Into Account



First Page Minimums On the Rise



Competition Does Play a Role in First Page Minimums


Average Ad Position Improving



Putting It All Together


Organic Traffic Growing



MozCast Google SERP Feature Graph

December, 2013

Source: https://moz.com/blog/mozcast-feature-graph-tracking-googles-landscape



May, 2015

Source: http://mozcast.com/features



2013 2015

77.9%

53.4%

20.8%

13.5%

60.3%

46%

17.2%

10%

Ad Placement


Two-Sided Market Implications

Users Google Advertisers


Users

Users are Shown Fewer Ads to Choose From

This could be good or bad depending on the

user and instance BUT

Google has LOTS of data to determine

which users want ads and which don’t


Google

Google Revenue Still Going Up



Advertisers 1) Reassess Goals, Budgets and Expectations

Past Performance May Not Provide a

Good Benchmark for Future Growth



Advertisers

Bing Ads Clicks Becoming Relatively Cheaper

1) Reassess Goals, Budgets and Expectations



Advertisers 2) SEO is absolutely, definitely ~ probably ~ not dead.



Advertisers 3) Remember - The auction is Google’s game.


THANK YOU!

Andy Taylor Merkle|RKG

[email protected] Thank you, Seattle!

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