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Tuesday, November 16, 2004

Will Google Ban Affiliate Bidding?

Some useful discussion on John Battelle's blog about the ongoing issues surrounding trademarked terms and (in a slightly separate but related vein) affiliates bidding on brand-name keywords.

One affiliate worries that Google will "ban" all affiliates from bidding on keywords.

I worry that these kinds of rumors may spread and create a distorted debate, and of course I have no idea what Google will actually do. But it's worth looking more closely at exactly what's being discussed.

In the first place, there are many different kinds of affiliates and they behave in different ways. Some are responsible and clever, some aren't. Some have their own sites. Others don't. But I don't believe it will be easy to come up with hard-and-fast rules to eliminate a whole category of bid types or words from the bidding universe, because these issues are rarely clear-cut.

On the whole, I believe that affiliate-parent relationships are best dealt with privately. But that's not to say that Google itself won't also have to step in to quell certain ongoing practices. And when they do, certain aggressive full-time affiliate folks who find themselves shut out of the action will have only themselves to blame for their lemming-like risk-free participation in the AdWords auction. Funny, but choking AdWords with crappy ads sounds a lot like spamming a search index full of crummy spam pages. It costs nearly nothing, but pays off if your affiliate link generates sales. Hmmm. There has to be a better way to live.

So, from the standpoint of the poor user, it looks like too many advertisers are in there choking the system with dictionaries full of keywords that lead users only to a big-company site like eBay. And they're doing so using the keyword replace function for maximum coverage with minimum work. In other words, they're using generic ad copy and hoping to use the automated tool to make it seem somewhat personalized. Some time ago I predicted that the impact of matching a user's search query exactly (until now, generally this improved user response) would be diminished if every ad on the page had the same title. Soon, the spoils would go to the advertiser who took time to write a genuinely interesting or personalized title.

Lo and behold, this day has arrived! I just did a search for "stairmaster." Here, in order, are the titles that were used by the eight ad listings on the SERP page:

Stairmaster

Stairmaster

Stairmaster

Stairmaster

Stairmaster

Stairmaster

Stairmaster

Stairmaster


How do you think the user is going to feel about that?

What I'm talking about may not be immediately apparent if you do a search in the United States (though it's not hard to find here either). Checking out the results on a Google search for "Audi A3" for the Canadian user, I saw only three ads, but all were affiliate ads pointing to eBay. That's silly, I thought.

I tried the same query for "Audi A4," but for the U.S. viewer. I got a mix of ad listings. Nothing to worry about there. Then I tried "Audi A4" for the Canadian viewer. Ouch. Eight -- all eight -- of the sponsored links were affiliate links to eBay. The reason these don't show up on the U.S. listings on the first page is that there are fewer advertisers in Canada, and the folks who play the "choke AdWords with keywords" game are usually lowballing at 5-10 cents since their arbitrage strategy only allows them to bid about this much.

Recent Google moves to put such keywords "on hold" or "in trial" before they accrue too many impressions are likely directed at such advertisers. A couple of things. First, Google has denied (on forums when asked) that recent moves such as this are meant to separate naughty advertisers from nice ones. Second, they also claim that the new system is actually giving a looser leash to some diligent advertisers who find themselves flirting with the 0.5% CTR cutoff. Maybe. No one really knows how this is supposed to work or what it's really supposed to do. What we do see is some campaigns working slightly better, while others are being whacked with a lot of "on hold" and "in trial" keywords based on a predictive model that Google is currently tinkering with.

Google has some tough politics to juggle at this juncture. The "affiliate folks" who are being asked to stop choking AdWords with dictionaries full of words are also the same "folks" that help Google generate so much revenue. These participants in the mayhem of low-ball bidding and search engine optimization and keyword arbitrage and such are often the very same people who are AdSense publishers, sharing revenue with Google on contextual ads. It's those publishers who have been responsible from taking Google AdWords from "fairly profitable" to insanely profitable" since the inception of the AdSense program. Google has to enact policies many such webmasters won't like, while reassuring them that they love them all dearly. It's a juggling act I don't envy.

If I had to make a prediction, I'd guess that Google will soon learn that they can't coddle this crowd at the same time as handcuffing them. At some point they'll need to be more decisive, and that will alienate a lot of the "AdSense crowd" and negatively impact Google revenues in the short term. But that probably won't be happening over the short term, as a drop in AdSense revenue would hurt Google's stock, and in spite of what the founders say, the stock price matters to most Google employees.

Thus far, the "new way of dealing with keyword relevancy" move hasn't completely quelled the fun and games in affiliate-land, as the Canadian user who typed "Audi A4" found out today. But this could become less of an issue soon as Google's new keyword relevance method gets refined. A query for "Frigidaire ovens" returns a reasonable mix of advertisers, including a top ad result from one of Google Canada's most aggressive advertisers, Sears.ca. But still, there are two of the eBay affiliate lowballers on that page. Were Canadian retailers to wake up and smell the baking banana bread, of course, those arbitrageurs would be crowded right off the page. For now, too many Canadian companies have chosen to ignore keyword bidding, so you can still get great exposure at the 10-cent level.

Google will no doubt continue to study ways of forcing advertisers to be more responsible with their keyword-dumping orgies. Quite simply, seeing eight generic affiliate ads for eBay for a single query is a horrible user experience. Don't even ask Jakob Nielsen what he thinks. Actually, let's. Jakob, maybe it's about time for an update on your April, 2003 column "Will Plain-Text Ads Continue to Rule?"

Posted by Andrew Goodman




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