In 1999, a company called Google decided to pilot an advertising program. The program featured ad prices based on cost-per-impression (CPM), and Google sold the ads using a team of sales reps. In 2000, the dotcom bubble burst, sending Internet advertising revenue down. For a while, Google considered selling all of its inventory to DoubleClick. However, in October 2000, Google introduced AdWords and continued selling ads on a CPM basis.
In 2001, Google switched to a pay-per-click advertising model. However, instead of just allowing the organizations with the highest budgets to post the most ads, Google added the concept of “click-through rate” to measure an advertisement’s relevance. For example, if a company set a low bid price for an ad but its ad achieved a high click-through rate, then the ad was considered more relevant and was given more views. In this way, the ad generated more revenue for Google even if its bid price was low. In 2001, Google made $85 million in ad revenue. In just Q2 of 2012, AdWords generated $12.21 billion for Google.
According to Google’s 2011 Economic Impact Report, businesses make $2 in revenue for every $1 that they spend on AdWords. To add to its value, Google has introduced some new features during the past few months. As AdWords celebrates its 13th anniversary, let’s take a look at five of Google’s most recent and relevant AdWords updates.
1. Easy Display Ads
Using Google’s new Ready Image Ads and Ready Ads Gallery features, AdWords users can create HTML5 ads that can be rendered on both desktop and mobile devices. Simply input your organization’s URL into the Ready Image Ads tool, and the program will generate ads based on your website text and graphics. If you want to build ads from scratch or create video ads, then you can use premade tools to come up with your own customized solutions.
2. Cross-device Conversion Statistics
Over the next few weeks, Google is rolling out cross-device conversion statistics to help organizations see how ads on one type of device reap conversions on other types of devices. This metric is designed for accounts that gain at least 50 ad conversions per day because Google needs a relevant sample size to make good conversion estimates. Google controls for general user activity by using data samples from users that have signed into Google accounts. Then, users can view cross-device estimates to see how their campaigns impact mobile-to-computer conversions, tablet-to-computer conversions and computer-to-computer conversions.
3. New Keyword Planner
The Google Keyword Tool no longer exists. It has been replaced by the Keyword Planner, which has both advantages and disadvantages. The bad news is that Keyword Planner only provides historical information for exact keyword matches instead of delivering broad swaths of keyword options. The good news, however, is that cost-per-click (CPC) data is far more accurate. You can enter up to 50 keyword combinations directly into the tool. Also, in addition to global search volume data, you can get keyword statistics for specific locations including country, region and city.
4. Ad Rank Updates
When AdWords decides which ads to display, it has taken into account both bid price and relevance. Now, Google has added the estimated impact of an ad as part of its scoring process. With this new metric, Google’s algorithm considers ad extensions and formats as part of an ad’s overall effectiveness estimate. In each auction, Google displays the highest-performing combination of extensions and formats so that you can learn which ads are most effective for your business.
5. Paid vs. Organic Search Report
After you link your AdWords and Webmaster Tools accounts, Google can produce a report showing you how much traffic came to your landing page through advertising and how much came to your page thanks to organic search results. Using this report, you can determine the optimal mix and position of keywords on the Google results page. You can also see which paid keywords are driving high volume compared to organic search results.
While AdWords looks substantially different, and you may miss the familiar Keyword Tool, Google has added many features to help you make the most of your AdWords dollar.
About the Author: Arthur Ginsburg is an Internet marketing consultant.