Google Adsense
I had a minor epiphany today. I've been trying to understand an aspect of Google Adsense that has troubled me but today I finally figured out what was happening.
When I would start a new Ad campaign on Google Adsense, initially I would have to bid high to get any impressions. Over time though I would get more impressions (and clicks) for the same bid and I could gradually reduce the bid and still get the desired amount of impressions but each impression, and click, was costing me less.
Here is what I think I have found. First, Google's algorithm doesn't merely give the ad slot to the highest bidder. It calculates both the bid amount and the likelihood of a click-through. This makes sense because, if I bid $10 for a click, they make no money unless someone actually clicks on that advertisement. If the click-through rate for my ad is .1% (1-in-1000), and someone else's click-through rate is 10% (1-in-10) but they only bid $1, it makes more sense for Google to display their advertisement because on average they are going to make 10¢ per impression on their advertisement and only 1¢ on mine.
So optimizing your click through rate is really a win-win situation, you pay less per click and thus your advertising dollar is more effective, Google wins because there are fewer wasted impressions and they make more per impression.
Now the art of optimizing your click through is one of continual monitoring and adjustment. You can list any number of advertisements in an advertisement campaign and if you choose for Google to optimize, it will rotate them, determine which work best, and give those ads preference.
Then you can look and see what worked and what didn't, determine the common elements in both, eliminate things that don't work and emphasize those which do, and then repeat the process. One thing I've found does seem to be important is the word "Free", odd since people KNOW you're selling something, but if something is offered for free it really seems to make a difference in the click-through rate. Your mileage may vary.
When I would start a new Ad campaign on Google Adsense, initially I would have to bid high to get any impressions. Over time though I would get more impressions (and clicks) for the same bid and I could gradually reduce the bid and still get the desired amount of impressions but each impression, and click, was costing me less.
Here is what I think I have found. First, Google's algorithm doesn't merely give the ad slot to the highest bidder. It calculates both the bid amount and the likelihood of a click-through. This makes sense because, if I bid $10 for a click, they make no money unless someone actually clicks on that advertisement. If the click-through rate for my ad is .1% (1-in-1000), and someone else's click-through rate is 10% (1-in-10) but they only bid $1, it makes more sense for Google to display their advertisement because on average they are going to make 10¢ per impression on their advertisement and only 1¢ on mine.
So optimizing your click through rate is really a win-win situation, you pay less per click and thus your advertising dollar is more effective, Google wins because there are fewer wasted impressions and they make more per impression.
Now the art of optimizing your click through is one of continual monitoring and adjustment. You can list any number of advertisements in an advertisement campaign and if you choose for Google to optimize, it will rotate them, determine which work best, and give those ads preference.
Then you can look and see what worked and what didn't, determine the common elements in both, eliminate things that don't work and emphasize those which do, and then repeat the process. One thing I've found does seem to be important is the word "Free", odd since people KNOW you're selling something, but if something is offered for free it really seems to make a difference in the click-through rate. Your mileage may vary.
posted by Nanook at 3:43 PM
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