Google announces change in AdWords affiliate policy
By Charlene Li
Today, Google started notifying its affiliate advertisers of a change in its AdWords policy. I had an opportunity to speak with Salar Kamangar, director of product management, about it on Wednesday.
Google will no longer be showing multiple ads with the same displayed URLs for the same search query. Their goal is to reduce duplicate ads from affiliates and to increase the diversity of the ads that appear. If there are multiple ads, the one with the highest “ad rank” (based on clickthrough rate multiplied by the maximum CPC rate) gets displayed.
There are a few implications for both affiliates and retailers with this policy change:
+ The affiliates that highly productive -- or are willing to pay a significantly higher rate to offset lower clickthrough rates -- will appear. An advertiser who doesn’t have a high ad rank can unseat the current advertiser only by increasing its maximum CPC rate. This is because it can’t increase the clickthrough rate for that keyword because its ad isn’t being shown anymore. The affiliate that does appear must continually ensure a high clickthrough rate and/or increase the maximum CPC to keep other affiliates from appearing.
+ Parent retailers could be beaten out of paid search by their own affiliates, especially if those affiliates are more targeted in their ad description, and thus get better clickthroughs. Salar rationalized that even if the retailer is bumped out, it would still benefit from the affiliate getting the sale, but it will be cold comfort to a product manager who’s being measured on search visibility. One additional benefit to the parent retailer -- to justify higher maximum CPCs, affiliates will have to increase their conversion rates, which will benefit the parent retailers.
Google claims that the main beneficiary will be its users as they will 1) only see one ad per unique URL and 2) see a greater diversity of advertisers. I’ve attached a screenshot of today’s results on a search for “sopranos box set” below. When the policy is implemented, the second ad with the www.amazon.com URL will not appear.
No doubt, this will make the ads somewhat less repetitive – in this case, two of the top ten ads will be removed. But affiliates will simple resort to using different displayed URL variations to get around this constraint– the human editors at Google just make sure that the URLs match the actual link. In the example here, the ads point to different pages on Amazon, ranging from the actual product page to different searches (“box set” versus “Sopranos+The Complete+DVD”).
So while Google’s intentions are good, the main offshoot will be that affiliates and retailers will have to pay even closer attention to their ad creative to stay ahead of the competition. And oh yes, let's not forget that Google will benefit from higher revenues as affiliates administer counterpunches with higher CPC rates and struggle to increase their clickthrough rates.
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