Algorithms Can’t Cure All – Google Gives up Arbitrage Fight

Analysis,Search,SEM by on May 21, 2007 at 7:59 pm

I’m sure you’ve heard by now that Google has been kicking Made-For-AdSense (MFA) publishers out of AdSense. This follows multiple unsuccessful attempts to use algorithms to make the business of AdSense Arbitrage unprofitable.

First was AdSense Smart Pricing. Google intended to more closely align advertiser benefit with publisher payout (eg drop payouts to crappy, poorly converting websites). It certainly reduced payouts to MFA sites, but they continued to flourish.

Later was the AdWords Quality Score. Google introduced the AdWords Quality Score to reduce long-tail arbitrage (Arbitrageurs using millions of low cost keywords driving traffic to MFA landing pages). Quality Score is a poorly defined metric that accounts for the ‘quality’ of the relationship between the keyword, ad text and landing page. Arbitrageurs adapted and found other sources of traffic (SEO being chief among them).

So, finally after four years of automated attempts at making AdSense Arbitrage uneconomic, Google is kicking MFA-publishers out of AdSense. I’m sure they are using algorithms to identify accounts for manual review, but they’ve clearly made an important directional shift in how they think about the problem.

Avoiding the Algorithm Trap - Scalability does not require pure automation

At Quova, we initially tried to build an all-automated IP Geolocation system. In 2002 we acquired Real Mapping, a Dutch company that had taken a purely manual approach to mapping the Internet (rooms of analysts). We made the purchase to consolidate the market, however we got lucky with the technology synergies (yeah, I hate the word synergy too). Their manual approach was a great complement to Quova’s automated algorithms. By the time I left Quova in 2004 we had achieved the ideal blend: expert network geography analysts teaching an automated mapping system.

I’ve seen countless hours poured into automated solutions to intractable problems. In many cases (particularly in startups), the answer isn’t a more elegant algorithm. A lot more can be accomplished quickly if you use automation to solve 95% of the problem and manual labor to get the rest. I’ll use Excel to clean data to the point where I can manually clean the rest or we’ll outsource a project to Elance instead of trying to automate the full task.

But what about Google’s Algorithms?

Although Google is most known for their algorithmic prowess, they depend heavily on legions of people that review:

  • web sites
  • ad text
  • search results

They are even now reaching out to the web at large, asking for help in identifying things like search spam and paid links.

In many ways, Google has become a master of blending automation with manual techniques. I have to admit that I’m surprised how long it took them to acknowledge that their algorithms alone couldn’t beat the Arbitrageurs.

Google getting greyer – Inline text ads?

Search,SEM by on March 22, 2007 at 7:40 am

Rahul pointed me to this Techcrunch article that covers Google’s launch of In-line text ads. For those of you unfamiliar with text links ads, these are the incredibly obnoxious, usually double-underlined links that are actually ads that appear in many forums and sketchy content sites.

I think Arrington sums it up well:

They’ve crossed a hazy ethical line here. If this product was announced on its own, it would be heavily debated by the blogs and press. But by burying it in other, bigger news, they’ve mostly avoided the critical analysis that this actually deserves

Yes, we should have seen this coming. The most recent change to the AdSense TOS raised a blog storm when publishers realized that they inline text ads violated that TOS. Google backed down and ‘clarified’ the policy, but I wouldn’t be surprised to see the old policy return.

I’ve fought to keep these things off of Judy’s Book. The typical pitch is “incremental revenue”, which may be true, but it is typically accomplished by tricking users. I haven’t seen an implementation of the Google text link ads, but their FAQ suggests that the links will be indistinguishable from from true text links until a user mouses over the link.

Oh, there’s a great negative SEO impact too for advertisers. Here is the example Google gives for the type of phrase that would benefit from text link ads:

“Widgets are fun! I encourage all my friends to Buy a high-quality widget today.”

If you invented this widget the author would typically give you a link. However, if the publisher has text link ads installed, the publisher would instead provide a link to an ad. No PR gets passed to you. Widespread adoption of Google’s text link ads will penalize the organic search results of advertisers that choose to participate. Not to mention degrade the user experience of thousands of sites across the web.

Buy Branded Adwords Keywords?

Analysis,SEM by on March 20, 2007 at 9:05 pm

I love good, well-thought analysis and strongly dislike half-assed, poorly drawn conclusions. I’ve found way too many examples of ‘analysis’ done where the authors didn’t do meaningful analysis, and therefore drew meaningless conclusions. Johnathan Mendez has a great analysis of whether it makes sense to buy PPC ads on your branded terms (for example, buying the search term “Amazon” if you’re Amazon.com).

His analysis indentifies two counter-intuitive conclusions about buying your branded keywords (for ecommerce sites):

  • PPC ads on your brand have no impact on traffic. You get the same traffic regardless if you buy PPC ads or not. So much for the shelf-space analogy.
  • The PPC ads raise conversion. Huh? This surprised me, but his analysis appears to be solid. He believes its a result of different searching modes. I’d also agree that makes the most sense.

His full blog post is very interesting, and worth a careful read.

Yahoo screws up geotargeting in Panama

Geolocation,SEM by on January 16, 2007 at 10:27 am

Hats off to the aimClear team for helping identify and clarify Yahoo’s geotargeting issues (via Online Marketing Blog).

Yahoo messed up so badly, it seems that they’ve disabled the geotargeting features for now. BTW, I can’t tell you how happy I am that these issues aren’t related to the core technology. At Quova, we constantly heard things like ‘why are you showing my IP to be in Minneapolis - I’m in St. Paul’.

Geotargeting is often mistaken for something that is easy to do and easy to implement. Neither are true. However, both are easy to do a poor job at. Effective use of geotargeting technology requires someone to sit down and carefully map out the full user experience. This involves these frequently overlooked scenarios:

  • No geotargeting information (or information that is known to be unreliable)
  • The user is trying to hide himself (yes, these can be detected)
  • Incorrect geotargeting information - you obviously want to give the user a way of telling you that you’re wrong.
  • Geotargeting information available at a different resolution. The user is reliably determined to be in the Bay Area, but the technology cannot reliably determine whether they are in Oakland or San Jose.

Google needs to update Adwords Tracking

Search,SEM by on January 12, 2007 at 10:04 am

I wanted to update the tracking in our Adwords account so that it tracks the same stats as Google analytics. Even though I have everything correctly set up in Google Analytics, I still need to set up Google AdWords ‘Site Stats’. I was shocked to see that Google requires the embedding of a small ‘site stats’ banner. Seriously. I thought only crappy freeware programs did this.

My favorite part from the FAQ:

Google has chosen to use visible Google Site Stats text for the conversion tracking process to make this process apparent to users. Our goal is not to place our brand or promote our company on your web pages; however, we feel that it is important to be honest with and respect the privacy of users being tracked.

cough bullshit cough

So, you can track the movements of every visitor to a site without their knowledge using Google Analytics? But you have to use the ghetto ‘site stats’ button if you want a better integration with Adwords?

That’s what privacy policies are for.

Search Engine Land vs. Search Engine Watch

SEM,SEO by on January 2, 2007 at 7:10 am

Update

An editor at SEW pointed out that I wasn’t comparing apples to oranges. He’s absolutely right – I’ve had the wrong SEW RSS feed in my reader for some time now. Their blog is far better: http://blog.searchenginewatch.com/blog/

I hate posts that aren’t fully researched – this was a little embarrassing…

————

It is clearer than ever that Danny Sullivan was the driving force behind SEW – allowing him to leave (and start a competitor!) was a huge mistake. Here is an example of the last few headlines to float across my RSS reader since Jan 1:

Search Engine Land:

Now look at the single post since the New Year from Search Engine Watch:

There is just no competition.

Google, Yahoo and IP Geolocation

Geolocation,Search,SEM,SEO by on December 29, 2006 at 2:43 am

I continue to think about the fact that Google is in the Czech market before Yahoo. I wonder how many other countries this is true for?

Fundamentally, I believe this is due to the fact that search is core for Google, but it isn’t core for Yahoo – content is. Related to the “peanut butter” problem, the barriers for localizing all of Yahoo’s content are tremendous, but it is far easier for Google to make its core search and adwords available in a new language. Just imagine trying to transalate www.yahoo.com and www.google.com. You’ll quickly be able to see how much harder Yahoo’s job is.

Google began licensing IP geolocation technology over 6 years ago. The most visible use of this technology is the country level redirects they do (visitors to Google.com from the Czech Republic are automatically redirected to google.cz). However, the technology enables a number of other critical components of Google’s business:

  • Search anywhere. Not only can you send users to a localized version, but you can figure out where servers are hosted, helping to match users with content relevant to them and their country.
  • Adwords anywhere. You can buy keywords in any country (and in most major cities). Since Google is easily able to customize search for any country they can also sell adds in any country (payment options obviously being one of the most major hurdles)
  • Adsense anywhere. Because Google can distinguish the country of visitors (and has ad inventory), Google can accept publishers that receive traffic from anywhere. Seriously, how absurd is it that YPN is only accepting publishers that receive US traffic?

Panama is Yahoo’s first step towards utilizing IP geolocation technologies, but this is all in the Overture division. I suspect that Yahoo is far from integrating these technologies into its search core. Yahoo had better get moving – 6 years is a lot of time to make up.

I hate capping my daily AdWords budget

Business,SEM by on November 25, 2006 at 5:28 pm

The proper way to control your PPC budget is to alter your bids. If you’re spending too much, lower your bids. You’ll get more clicks for your budget dollar doing it this way.

There are only 3 reasons you should ever cap your adwords/overture budgets:

  1. Starting a campaign. You don’t know conversion or traffic yet and you don’t want to throw money down a bottomless pit while figuring it out.
  2. Brand advertising. I don’t understand why you’d spend brand advertising dollars on PPC campaigns, but if you are spending it, you’re typically applying a budget. More than a few studies show that PPC does not function effectively as a brand advertising medium.
  3. You’re bidding the absolute minimum that you can on all keywords, and you’re still spending more than you can afford, then you have no choice but to use the daily budget caps.

None of the three reasons indicate anything favorable about your business. #1 (starting a campaign): you don’t know your conversion. You’ve got to figure it out ASAP. #2 (branding): well, good luck. You’re going to have to spend a ton of cash to meaningfully impact the typical measures of brand advertising. #3: you need more money. Go beg and borrow for more dollars. You know that the campaign is profitable, so grow it.

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