Noticing a steep rise in the cost to defend your brand name on Google Ads? You're not alone.
About 20% of Google's revenue comes from companies just trying to make sure that their brand (which they rank #1 for organically) doesn't get buried under a bunch of competitors' ads.
The idea that Google has knobs and levers to "keep ad revenue up and to the right" shouldn't be a surprise. But, if you read this article and think about who the "winning advertiser" winds up being, you realize that their "knobs and levers" disproportionately inflate the amount you pay just to show up on your own brand.
Google uses "predicted click-through rate" (pCTR) to determine who has the highest quality ad for the search. If the search query is "YOUR BRAND" - then the advertiser with highest pCTR is almost certainly YOU. In real terms, you might have a pCTR of like 11% and the next highest bid might have a pCTR of 4%. Google then uses a variety of algorithmic "knobs" to increase the price for the expected "winning advertiser" (YOU).
Now imagine that the search query is "SOME GENERIC KEYWORD". Even if you have do have the highest pCTR, there's probably a competitor that is close. To be concrete - let's say your pCTR is 5%; on a generic keyword the next competitor is likely to be at 4.5%.
Here's the thing: Google's knob uses the distance between the winner and the runner up (11% - 4% = 7%) vs (5% - 4.5% = 0.5%) to determine their "price adjustment".
So, what can you do? First of all, for a pretty long time, one of Google's "knobs" has been adding trojan horses to the "default" settings in ad campaigns. For example, a recent new "default" when targeting a country is not just to include people *in* the country, but also people that are *interested* in that country. It is impossible to know what "interested" means, but when we inadvertently left it on, we got a lot of clicks from Nigeria when targeting the US -- and I just picture Nigerians streaming re-runs of Friends from YouTube, and Google is like "Interested in United States"
So, DO NOT set up any ad campaign or group until you have gone through a checklist of default settings to turn off. I'll link to one of ours in the comments.
More directly, Google's "knobs" aim to increase the price for the "highest bidder" and "increase the steepness (of the pricing curve)". So, a strategy we've written about is to aim for the #2 spot rather than number one. Because Google will keep charging you as much as you're willing to pay, and is *actually* only going to inflate the predicted price of the "runner up" -- by adjusting your bid to the #2 position, you're likely to keep your #1 spot most of the time, but limiting the amount that Google's algorithm will gouge you.
I'll post a link with more details about the #2 position strategy in the comments.
https://lnkd.in/gmpV3dft