SEO

Do New Advertisers Pay 4x More Than Established Advertisers?

An experienced search marketer is aware that what you pay per click within Google is directly tied to your Quality Score and the Ad Rank (Quality Score * Max CPC Bid) of the other advertisers. If you are new to search marketing, you might not know that only in the last few years did Google even give advertisers the ability to see their Quality Score for the keywords in their account.

Prior to this change, which happened in 2007, Google only showed a text representation for Quality Score (Poor, OK, and Great). Many search advertisers may be surprised to know that your actual Quality Score and the Quality Score displayed in your account are not the same. Every keyword has a Quality Score, every ad has a Quality Score, and every account has a Quality Score; however, the only Quality Score number that

Google is willing to show advertisers is the Quality Score tied to the keyword (which is turned off by default). When I’ve spoken with Google, I’ve been told that I should focus on improving the keyword level Quality Score, but tests that I’ve run have shown—hands down— that account and ad Quality Scores have big implications when you consider your per-click costs.

Recently, I did a case study to measure the impact of these hidden Quality Scores. To set up the test, I replicated one of our accounts into a brand new account. Shortly after, I began to see keyword level Quality Scores at even levels between the two accounts. I set maximum CPCs equal to one another for all keywords in both accounts, and lo and behold, actual per-click costs were 4x higher in the new account than the older account, largely driven by the historical account Quality Score.

When I made all other factors constant (excluding the account), I saw a 4x difference in CPCs because the original account has over 5 years of high historical performance that drove better account level Quality Scores than the new account had been able to achieve in a few weekstime.

 Do New Advertisers Pay 4x More Than Established Advertisers?

Interestingly, accounts default to not show keyword level Quality Score in the AdWords interfacealmost like they’re trying to hide it from less savvy users. So why wouldn’t Google share this information? There are three reasons I can think of that I believe have some merit (please comment below if you think of other viable reasons):

  1. Google thinks showing this information will only complicate a process that they hope to make easy enough that the least sophisticated among us can feel comfortable running their own account.

  1. Google offers free advertising credits to new advertisers. By having an account level Quality Score, advertisers are discouraged from constantly creating new accounts for the free advertising (I think this is the least likely concept).

  1. With so much focus on improving Quality Score, it is common for advertisers to restructure campaigns and occasionally to make large enough adjustments that warrant setting up new accounts. The more frequently advertisers add new accounts, the more the market pushes CPC bids higher.

There are probably a hundred other reasons that Google doesn’t share this information, but I think it is worthwhile to note that as you optimize your paid search accounts, you should keep in mind these invisible Quality Score components and make the decision that is best for you as an advertiser, and not what is most convenient for Google and their shareholders.

Just last week, Alex Cohen of Click Equations and I were talking about how we, as search marketers, need to look out for our own self-interest and. in doing so need to demand more from Google, Yahoo, and Bing. I am asking you today to contact your Google rep and demand that they begin to display account level and ad level Quality Scores. The only way we can invoke change is if we demand it and expect it.

 Do New Advertisers Pay 4x More Than Established Advertisers?
James Green is the founder of Siftable.com which serves as a search marketing agency/consulting group with expertise in building, growing and optimizing campaigns to drive profitable growth.

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9 thoughts on “Do New Advertisers Pay 4x More Than Established Advertisers?

  1. QS is Google's black box, and no matter how much they tell advertisers about the factors influencing QS, there is still more they aren't telling advertisers. This is vital information and Google needs to be more forthcoming.

    1. As search marketers and as advertisers we need to put pressure on Google to not hold our advertising dollars hostage. From my stand-point, lack of visibility goes against their Don't Be Evil mantra in a big way.

  2. I think that Google is doing what we call “making hay as the sun shines” on its Adwords model and now that you can bid on YouTube search results position, they will rake in more and more cash.

    But, one day, someone – Facebook? – will come up with something else clever and then they'll have to be a little more forthcoming to keep their advertisers happy.

    1. Yeah the hope is that we (as a community) can help expedite the process sooner of providing Google reason enough to be more transparent on this issue (I think there are other issues that they are very transparent which is appreciated).

  3. Ok so new advertisers pay more but doesn't everyone who comes to the party late? Outside of the issues around trusted accounts having a better quality score what is the age difference?

    I mean after 2 weeks do the scores level out, or is it after 2 months or 2 years… new accounts always show a spike, but it might give you reasons enough not to create a new account each campaign….

  4. Newbies always pay more because they still have to figure out what they're doing. Established advertisers know how to get exposure at discounted rates.

    1. But in the example case study we did it wasn't an issue of us not knowing what we were doing in one account and knowing what we were doing in the other. It was 100% tied to Google's quality score which they don't show. When we asked Google they were perplexed and as we pushed them they confirmed that account level Quality Score was the issue.

  5. I think more of this has to do with the fact that new advertisers don't have existing data to analyse and figure out the best strategy for them since they just started but existing advertisers have been running their campaigns for a while so they should have good grip of what works and what doesn't