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Thursday, June 01, 2006

Google AdWords API Pricing

It's safe to say it's a time of turmoil for those companies, like Atlas and Inceptor, who offer third-party bid management software.

First, the new MSN adCenter is released, and according to Inceptor's Michael Sack, they thought it would be a great idea to come out with "basically Google - it's basically AdWords." And AdWords has never been as easy for bid management systems to work with.

Now Yahoo, with its Panama platform in development, is going to be completely revamped by year end as well.

Adding to the pain is new AdWords API pricing, which one panelist on the ad management tactics panel at SES London today likened to "a kind of nasty double taxation." For the average application, changing a few bids every day would come with a "nominal" cost. But for automated systems that rely on frequent bid updates, the cost is significant. One panelist was working with the API to change ad copy to reflect updated pricing on products. At about six cents a change, that sounds doable. But what if the model depends on 5,000 price updates daily? That extra daily $300 stings more than a bit.

Google's AdWords API blog states that some developers, such as those working for individual companies to run their own campaigns, "may" be exempt from the fees. Already, that suggests the fee structure is negotiable. So the process is in motion: bid management software companies will be haggling (or whinging, or whining, depending on where they reside) over the price. I'd bet that Google will take a hard line with companies whose income is derived from selling auxiliary Adwords-related tools to a large number of customers, as opposed to those who want the API access for "their own" use. But what about the gray area, such as the smaller agency or developer who develops a tool to aid clients with campaigns -- say, a dozen or so clients? Even here, I suppose it is not a huge cost, and if there is a benefit exceeding the cost, that cost probably can and should be passed onto the client. Has Google got the price right? Is it really nominal as they claim? Time will tell. The impact, in any case, is acute on a handful of marketplace players. A more diffuse price increase / impact will be passed onto customers who use API-driven services.

Posted by Andrew Goodman




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