As reported in Search Engine Roundtable, Google recently announced that they are ready to start spidering AdWords landing pages to assess “quality score.” In Google’s own words: “If a landing page has informative content related to its AdWords ads and keywords, these keywords will receive higher Quality Scores and potentially lower minimum cost-per-click bid (CPC bid) requirements. Poor quality landing pages or those that restrict visits by our system are likely to experience a decrease in quality scores (and a potential increase in CPC bid requirements).” This is actually something Google announced about six months ago. Apparently they are now ready to actually start implementing this system.

My sense is that this is potentially innocuous, or potentially very dangerous, depending on the path Google is taking with this.

The “Do No Evil” Path

Path one can basically be described as the “stop AdWords arbitrage” path. In this scenario, Google is trying to crack down on companies that buy low-priced CPC ads on Google, only to send users to an AdSense page with higher priced ads on them, effectively playing the margins between high and low-priced keywords. Google doesn’t like this for two reasons: first, it’s bad user experience. If a user clicks on an ad, the user expects to be sent to a relevant Web site. If users repeatedly have bad experiences clicking on ads, they will eventually stop clicking on ads altogether, thereby reducing Google’s revenue.

Second, AdWords arbitrage is also bad advertiser experience. Oftentimes, companies that engage in this practice do everything they can to conceal the fact that links are advertisements to the end user. Since the model can’t work without a high clickthrough-rate after the initial click, the company needs to make sure that almost everyone who comes in the door clicks on an ad. As a result, I’m pretty confident that the actual quality of clicks on these AdSense keywords is very low. Over time, this will reduce the amount that advertisers are willing to pay for AdSense keywords.

When you combine blatantly bad user experience with equally awful advertiser experience, it’s hard to fault Google for cracking down on AdWords arbitrage. And if this is the point of quality score, I support the initiative.

The “Do Evil” Path

There is, however, a scarier – Big Brother – scenario. In “path two”, Google decides to play God. The focus is no longer AdWords arbitrage sites, but any site that Google concludes may not be relevant (defined exclusively by Google). Consider this scenario: you have created a site dedicated to comparing online flower vendors (ProFlowers, 1800Flowers, etc). Every time someone buys flowers from a vendor on your site, you get a revenue share – a classic affiliate model. Moreover, you are also providing a valuable service to users, in that they can compare prices from multiple vendors on one page.

Google, however, disagrees. In Google’s eyes, you are a leech on the system – an unnecessary step for consumers who just want to order some flowers. Surely it can’t be good user experience to send someone to a comparison shopping site to buy from 1800Flowers if you could just send them directly to the vendor? As you and your ‘cronies’ continually optimize your user experiences and conversion rates, Google’s ad space is increasingly flooded with ‘middlemen’ while the ProFlowers of the world are pushed lower and lower in the AdWords rankings.

Internally, Google is getting a lot of pressure to clamp down on your flower comparison site. The sales force – empowered with the task of going after the “G1000” – the top 1000 brands in the US – is having a hard time meeting their quotas, because ProFlowers can’t bid high enough to get a lot of clicks. Wall Street is also concerned – after all, if GM, AT&T, and Coke aren’t among Google’s top advertisers, can Google really be a viable play long-term?

So, over time, the Google “quality score algorithm” slowly optimizes Google based on Google’s preferences. No more AdWords arbitrage, no more lead generation companies, perhaps even no more comparison shopping engines (, Nextag, etc). In the new model, you type in “order flowers online” and 1800Flowers and ProFlowers compete for first position, while your little comparison site has to struggle for anything on the first page of results (where it matters).

A Logical Step for Paid Search?

When you look at the history of PPC advertising, “path two” seems like a logical – if dismal – path. When GoTo (now YSM) first launched in 1998, the model was close to a pure pay-per-click model. Barring editorial guidelines (i.e., a flower shop couldn’t buy the word “Sony Playstation”), every advertiser on a particular keyword had the same opportunity to show up #1; whoever paid the highest cost per click (CPC) was the winner. I have always liked this model – both from a fairness model and from a user experience perspective (after all, an advertiser with a totally irrelevant product won’t be able to afford to stay at #1 for very long, since they won’t get any conversions).

Google iterated on the GoTo model with their “yield management” system, which combines CPC with clickthrough rate (CTR). In a yield management model, an advertiser is also rewarded for the quality of their ad text. This is a reasonable change to the system, since it was fairly easy in the GoTo system to create ultra-restrictive ad text as a way of bidding #1 but reducing errant click-throughs. Moreover, yield management is fair because it gives all advertisers the same opportunity to be #1 – if you have bad ad text, you can change it and eventually move to the top.

You could argue that “quality score” adds a third element to the equation – landing page relevance. Now, to show up #1, you need a combination of high CPCs, high CTR, and high landing page relevance.

The Dangerous Path Ahead?

The problem with the quality score model is this: it is not fair. In a quality score system, your ads can be irrevocably downgraded simply because Google says so. No amount of bid adjustments and ad text changes can change your fate. In many ways, it is similar to organic search (SEO). Google decides which site is the most relevant and that’s final (it also follows that this sort of system could create an entirely new industry – SEMO – search engine marketing optimization!).

Think of SEO and SEM like two parts of your evening newscast – SEO is the journalistic content, and SEM is the commerical breaks. Ultimately, the decision to broadcast a particular news story is up to the television station. For example, if Fox News wants to only cover stories that paint conservative politicians in a positive light, they can do that. Fox’s decision to run some stories and not others will determine their viewership and financial success.

But what if Fox decided it only wanted to run advertisements from certain advertisers? Well, on its face, that’s OK – it basically means that Fox is leaving money on the table at their own peril. Let’s make this scenario a bit more relevant though; what if 56% percent of all television ads ran through Fox? If Fox decided that they simply didn’t want to do business with some advertisers, and set up rules that basically made it impossible for these businesses to advertise with Fox, could they? At some point, if a company wields dominant control over a form of media distribution, a different set of rules apply.

Much Ado About Nothing?

At the end of the day, this post may be totally irrelevant (it wouldn’t be the first). If Google is just cracking down on AdWords arbitrage, I don’t have too many complaints. But when you combine an internal focus on brand advertisers, Google’s increasing requests for more and more data about advertisers’ businesses, and an overwhelmingly dominant market share that enables Google to do whatever it wants, a press release about “quality score” can sound downright scary. Here’s to hoping I’m wrong!

Tags: quality score, arbitrage, adwords, adsense, google, ysm, goto, overture, search engine market share

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David Rodnitzky
David Rodnitzky is founder and CEO of 3Q Digital (formerly PPC Associates), a position he has held since the Company's inception in 2008. Prior to 3Q Digital, he held senior marketing roles at several Internet companies, including (2000-2001), FindLaw (2001-2004), Adteractive (2004-2006), and Mercantila (2007-2008). David currently serves on advisory boards for several companies, including Marin Software, MediaBoost, Mediacause, and a stealth travel start-up. David is a regular speaker at major digital marketing conferences and has contributed to numerous influential publications, including Venture Capital Journal, CNN Radio, Newsweek, Advertising Age, and NPR's Marketplace. David has a B.A. with honors from the University of Chicago and a J.D. with honors from the University of Iowa. In his spare time, David enjoys salmon fishing, hiking, spending time with his family, and watching the Iowa Hawkeyes, not necessarily in that order.