Would you let Google optimize your Ad Rotation? The results may shock you!
Quite a few eyebrows were raised in the PPC community on April 30th when Google announced a seemingly small change to the AdWords interface. The change involves the way in which ads are rotated, and advertisers have quickly realized it has some huge implications. Today we’ll talk about how this change affects the way advertisers test ad creative, and how it will ultimately change the way in which accounts are managed.
In advertising, showing potential customers the right messaging is vital. Traditionally, advertisers using Google AdWords have been able to perform A/B testing with ad copy in order to find out which ad (and ultimately which messages) work best to maximize conversions. This was done quite effectively within the AdWords interface by selecting the delivery method “Rotate: Show ads more evenly”. The option ensured that ads within the campaign were impressed about an equal number of times, thus creating a controlled testing environment where different versions of ad copy could be tested. Because of the update, the approach taken to testing ads will be forced to change.
With this update, any campaigns that have use the option “Rotate, Show ads more evenly” will be automatically “optimized” after a period of 30 days. This means that after 30 days of showing your ads evenly, Google will take the ad with the better click-through rate and start showing it more often. All ads will be subject to this optimization, and the only way reset the 30 day clock (and make them rotate evenly) is to edit the copy in some way.
What Does This Mean? What are the Implications?
Well, if Google is optimizing the way your ads are shown, that’s good, right? Not necessarily. In this case, the key question to ask is: optimized for what, exactly? The answer: Clicks. Initially, this may seem like a good thing. More clicks equals more traffic to your site, and ultimately, the possibility for more conversions. Let’s go through a simple example on how Google performs this optimization.
Two ads, Ad X and Ad Y, have been running in an ad group for 30 days. They both have 5,000 impressions over this time period due to the even rotation setting. However, Ad X has a click-through rate of 3%, and Ad Y has a click-through rate of 4%. Therefore, after 30 days, Google will serve Ad Y the majority of the time. The implications seem positive for everyone. The more relevant ad is showing to searchers, which leads to more clicks, more traffic to your site, and more money for Google. Everyone seems to win.
Wait just a minute. Let’s add some example conversion metrics to those same ads and then look at the effects of the optimization. Over the same 30 day period:
- Ad X: 5,000 Impressions; 3% Click-through Rate; 11 conversions; Total Conversion Value: $2,000
- Ad Y: 5,000 Impressions, 4% Click-through Rate; 5 conversions; Total Conversion Value: $500
Which ad did Google show more after 30 days? The ad that made 75% less in revenue.
As most advertisers know, more clicks don’t necessarily translate into more revenue. In this example, because the optimization is based on clicks, the advertiser is losing out on a significant amount of revenue. If, like most advertisers, you’ve relied on the “Rotate ads evenly” setting to perform your ad testing, you’ll now have to change your strategy.
New Challenges and Opportunities in Campaign Management
In order to combat issues like the example above, significantly more attention must be paid to A/B testing efforts. While the update creates more management work up front, it also creates new opportunities. We at Exclusive Concepts are creating new strategies around effective A/B testing and finding creative solutions to maintain the intelligent rotation of ads. We want to ensure not only that the most relevant ads are showing, but that the ads that drive the most revenue don’t become lost in the shuffle. This update has created some unique challenges, but it’s also afforded us the opportunity to further optimize accounts to drive the maximum amount of revenue for our clients.