Change in AdWords Formula now Live
Google posted this afternoon that the announced changes to the Top Ad Placement formula are now in effect. From discussions we have had this change has been difficult for many retailers to understand and has caused some confusion about the impact. In short:
Old method
Top ads (above the natural results) were placed based on a combination of the quality score and the actual CPC paid.
All other ads (right hand rail and beyond page one) were placed based on a combination of the quality score and the amount the advertiser was willing to pay (the max CPC).
New method
All ads are placed based on the combination of quality score and max CPC.
In talking with a couple folks at Google last night at the Google Dance one of the reasons for this change was that good, quality ads that did not have “auction based pressure” were not getting elevated to the top spots. In Google’s view the presence of this is out of the advertiser’s control and as a result the ability to get to the top could be constrained by a factor that was out of your control. This change should allow ads to get to the top even if they are the only advertiser bidding on that keyword. Google is encouraging advertisers to watch their results closely which is always a good idea.