Color me not surprised at all: I get back from vacation to find that Google has announced yet another change that seems designed to increase profits in Mountain View , not improve results for advertisers.
Ad Rotation Wears Out its Welcome
On Tuesday, Google announced that the ad rotation setting will only be available for 30 days . As Larry wrote earlier this week:
Using the "rotate" setting for Ad Rotation  is helpful for A/B testing of ads – especially because the automated "optimize for clicks" and "optimize for conversions" ad delivery options have a tendency to declare a winner rather early, particularly for small and medium sized advertisers … As usual, Google claims that the change is to improve the system for both advertisers and users.
Once again it seems that Google is trying to enforce a one-size-fits-all approach to AdWords accounts. As Kristin Pribble commented on Larry’s post (emphases mine):
This will make it even more difficult to conduct an accurate A/B test - especially for small to medium sized accounts. There are adgroups that don't have enough data after 30 days to declare a winning ad text. It's even more frustrating that Google isn't giving advertisers a choice to decide what works best for their account.
Alan Mitchell has outlined exactly how these changes will benefit Google at the expense of advertisers in a post on Search Engine People. True PPC nerds will want to check out all the graph porn and follow the exact calculations, but here’s a high-level overview of what Alan’s post communicates:
- There’s a point after which clicks cost you more than you make (i.e., where cost per click , or CPC, exceeds revenue per click, or RPC)
- Profits (for the advertiser) are maximized where the marginal CPC meets the marginal RPC
- Google’s “improvement” to exact and phrase match  means that revenue per click becomes an average of multiple keywords (close variants, plurals and so forth), and some of those keywords (which are outside your control) might have different levels of advertiser competition and conversion rate
- This change tends to reduce profits for the advertiser, even at the same click volume, while increasing Google’s profits from those clicks: “Google has essentially increased the average CPC, without increasing the average CPC. Very clever.”
In sum (emphases mine):
By rolling out their 'improvements' to exact and phrase match, Google has essentially removed the opportunity for PPC advertisers to take advantages of differences in CPCs caused by varying levels of competition of closely related keywords, and removed the opportunity for PPC advertisers to take advantage of differences in revenue caused by varying conversion rates of closely related keywords.
Instead of being able to set higher bids for high-performing variants, and lower bids for poor-performing variants, with this new feature PPC advertisers can now only set one bid for the entire group of keyword variants. The opportunity to take advantage of differences between close variants is now removed, and Google's revenue increases as a result.
Kind of a dick move, Google.
Luckily, you can opt out of these changes, though they will become the new default. For now, you can keep running your exact and phrase-match keywords the way you were running them before, if you’re aware of the changes and know to alter your settings.
For more on this change, see Martin Roettgerding’s tips on predicting the impact of “exactish match” using your search query report.
Penguin Is the New Panda
The algorithm change that SEOs internally dubbed the “OOPS” update  (for over-optimization penalty) has been given an official name, which seems designed to confuse everyone: the Penguin update. The two are related – both Penguin and Panda, aside from being adorable zoo animals, are designed to reduce spam and other low-quality sites in the SERPs.
Has your site been affected by the Penguin update? Are you worried that it might be in the future? Here’s more information on preparing and/or recovering from Penguin:
Penguins, Pandas, and Panic at the Zoo – Dr. Pete reviews the changes, the impact, what to do and what not to do in the wake of the update.
Penguin 1.0 Initial Findings – Unnatural Inbound Links Heavily Targeted, Other Webspam Tactics Await Penalty? – Glenn Gabe takes a look at some of the tactics that seem to have been penalized by Penguin and makes some recommendations and closing points. (Note: You can’t file a request to have your site reconsidered. If your rankings have dropped, you’ve been penalized algorithmically, not manually.)
Google Penguin Update Recovery Tips & Advice – Danny Sullivan goes over some of the main talking points and questions whether this update has helped or hurt searchers and small businesses – more on that here: “Did Penguin Make Google’s Search Results Better Or Worse?”
The Google Penguin Update: Over-Optimization, Webspam, & High Quality Empty Content Pages – Aaron Wall points out that this update has seemingly affected a huge number of sites, given the number of complaints and the petition to stop it. He also calls attention to some of the weirder results of the change, such as Viagra.com no longer ranking for its branded search, and an empty blogspot site coming up #1 for “make money online.”
Penguin Pain and Forward Planning – Luke Masters at Distilled explains how to assess the damage to your own site and lists some key points to check, especially surrounding links (link velocity, quality of linking sites, etc.).
Did your rankings and/or traffic drop as a result of the Penguin? Have you noticed any funny business in the SERPs?
More Web Marketing Highlights
I saw a few interesting posts this week about the effects of social activity on search results, including:
AJ Kohn on “Social Echo,” or the aftereffects of social sharing: “In truth, it’s not about those specific Tweets, Shares, +1s and Likes. It’s the echo of those events that is meaningful. It’s the fact that someone sees that Tweet, goes and reads your content, finds it valuable and then decides to save, comment, share or link to it.”
Bill Slawski on PostRank, which Google acquired last year as part of its strategy to “move towards looking at more social signals for the potential ranking of content shared by others.”
Wil Wheaton is pissed that Google is forcing YouTube viewers to G+ videos instead of just giving them the thumbs up or down that was native to YouTube for years. (It looks like it was a test versus a permanent change.)
Have a good weekend, folks.