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Dynamic Ads: Writing a Blank Check to Google

Published: October 24, 2011

Author: David Rodnitzky

Imagine going into a casino and being met by a friendly hostess at the front door. As you approach, the hostess smiles and says, “Hello, thanks for coming in. How much money would you like to lose today? Just write me a check and I’ll maximize the amount of fun you have losing that money!” Not many people would like that sort of program, but that’s an apt analogy for the recent “dynamic ads for search” program Google has recently announced. While it’s currently only an optional beta, if this is the direction AdWords takes, it would be disastrous for advertisers, agencies, and, well, everyone but Google.
According to a recent AdWeek article, dynamic ads for search eliminate the notion of keywords or queries entirely. Instead, “With the new product, advertisers just point AdWords toward the pages that they want to promote. Then Google matches the ad with the best searches and generates an appropriate headline.” As a Google product manager tells AdWeek:
“(Baris) Gultekin predicted that this could eventually represent ‘the future’ of AdWords, because it’s a more natural way to think of ads—businesses usually start with a product or Web page that they want to promote, then with AdWords, they have had to think of a long list of relevant keywords. With Dynamic Search Ads, Google can take ‘the middle layer of keywords’ out of that process.”
Ah yes, that dreaded “middle layer” of keywords, which, by the way, happens to be the raison d’etre of AdWords’ incredible success in the first place. Why? Because keywords enable smart advertisers to precisely target users based on the intent they express in their search query. Smart advertisers quickly learn that the phrase “mortgage rate” has totally different intent than “mortgage rates,” and that “buy night stand” is totally different than “one night stand.”
Of course, there are many advertisers who I would not classify as “smart,” at least when it comes to AdWords. These advertisers typically buy too many keywords on broad match (resulting in lots of irrelevant clicks and additional revenue to Google) or too few keywords on exact match (resulting in missed opportunity for the advertiser and missed revenue for Google). My assumption has always been that keywords had a net positive impact for Google’s bottom line (i.e., that most advertisers err on the side of being too aggressive than too conservative). If my theory is correct, why would Google ever want to abandon keywords at all?
I believe the answer comes down to reducing transparency. With keyword-level and query-level data, smart advertisers can deftly pick and choose where they want to show ads and create highly efficient campaigns. Take away the ability to control spend at a keyword/query level, and these smart advertisers are now knocked down to the level of less smart advertisers, the ones who are already happy to buy broad-match keywords and assume that Google will match them on relevant queries. To put it another way, “dynamic search” would have no impact on dumb advertisers who are already running inefficient campaigns, but it would make it harder for smart advertisers to continue to run at their current levels of efficiency. Translation: less transparency for advertisers, and more control of revenue for Google.
Google notes in the AdWeek article that advertisers can still run keyword-focused campaigns, even if they are in the dynamic search beta. And they also claim that those who have opted in to dynamic search are seeing a 5-10% increase in conversions. But as Google’s product manager notes in the article, this could be “the future” of AdWords, so keywords might someday be a distant memory.
If AdWords turns into a system where advertisers show up at the door with a check, and a friendly hostess takes their money and then magically delivers the “most relevant” ad text, landing pages, and bids, it is truly no different than a casino placing your bets, or a fox guarding a henhouse. I don’t like it one bit.
David Rodnitzky, CEO, PPC Associates
– Questions? Comments? Email bloggers at ppcassociates dot com.

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