Sales and Support for Google's AdWords division is based in Mountain View, California, with major secondary offices in Ann Arbor, Michigan, the company's third-largest US facility behind its Mountain View, California, headquarters and New York City office. Engineering for AdWords is based in Mountain View, California.
Pay-per-click advertisements (PPC)
Advertisers select the words that should trigger their ads and the maximum amount they will pay per click. When a user searches on Google, ads (also known as "creatives" within Google) for relevant words appear as "sponsored links" on the right side of the screen, and sometimes above the main search results. Click-through rates (CTR) for the ads are about 8% for the first ad, 5% for the second one, and 2.5% for the third one. Search results can return from 0 to 12 ads.
The ordering of the paid-for listings depends on other advertisers' bids (PPC) and the "quality score" of all ads shown for a given search. The search-engine system calculates the quality score on the basis of historical click-through rates, relevance of an advertiser's ad text and keywords, an advertiser's account history, and other relevance factors as determined by Google. The quality score is also used by Google to set the minimum bids for an advertiser's keywords. The minimum bid takes into consideration the quality of the landing page as well, which includes the relevancy and originality of content, navigability, and transparency into the nature of the business. Though Google has released a list of full guidelines for sites,[8] the precise formula and meaning of relevance and its definition is in part secret to Google and the parameters used can change dynamically.
The auction mechanism that determines the order of the ads is a generalized second-price auction. This is claimed to have the property that the participants do not necessarily fare best when they truthfully reveal any private information asked for by the auction mechanism (in this case, the value of the keyword to them, in the form of a "truthful" bid).
AdWords features
IP address exclusion
In addition to controlling ad placements through methods such as location and language targeting, ad targeting can be refined with Internet Protocol (IP) address exclusion. This feature enables advertisers to specify IP address ranges where they don't want their ads to appear.
Up to 20 IP addresses, or ranges of addresses, can be excluded per campaign. All ads in the campaign are prevented from showing for users with the IP addresses specified.
Location-based exclusion is also offered as a method of narrowing targeted users.
Frequency capping
Frequency capping limits the number of times ads appear to the same unique user on the Google Content Network. It doesn't apply to the Search Network. If frequency capping is enabled for a campaign, a limit must be specified as to the number of impressions allowed per day, week, or month for an individual user. The cap can be configured to apply to each ad, ad group, or campaign.
Placement targeted advertisements (formerly Site-Targeted Advertisements)
In 2003 Google introduced site-targeted advertising. Using the AdWords control panel, advertisers can enter keywords, domain names, topics, and demographic targeting preferences, and Google places the ads on what they see as relevant sites within their content network. If domain names are targeted, Google also provides a list of related sites for placement. Advertisers may bid on a cost-per-impression (CPM) or cost-per-click (CPC) basis for site targeting.
With placement targeting, it is possible for an ad to take up the entire ad block rather than have the ad block split into 2 to 4 ads, resulting in higher visibility for the advertiser.
The minimum cost-per-thousand impressions bid for placement targeted campaigns is 25 cents. There is no minimum CPC bid, however.
AdWords distribution
All AdWords ads are eligible to be shown on www.google.com. Advertisers also have the option of enabling their ads to show on Google's partner networks. The "search network" includes AOL search, Ask.com, and Netscape. Like www.google.com, these search engines show AdWords ads in response to user searches, but do not affect quality score.
The "Google Display Network" (formerly referred to as the "content network") shows AdWords ads on sites that are not search engines. These content network sites are those that use AdSense and DoubleClick, the other side of the Google advertising model. AdSense is used by website owners who wish to make money by displaying ads on their websites. Click through rates on the display network are typically much lower than those on the search network and are therefore ignored when calculating an advertiser's quality score.
Google automatically determines the subject of pages and displays relevant ads based on the advertisers' keyword lists. AdSense publishers may select channels to help direct Google's ad placements on their pages, to increase performance of their ad units. There are many different types of ads that can run across Google's network, including text ads, image ads (banner ads), mobile text ads, and in-page video ads.
Google AdWords' main competitors are Yahoo! Search Marketing and Microsoft adCenter.
In 2010, Yahoo formed a partnership with Microsoft, giving Microsoft the control over powering the Yahoo search marketing ads. Both accounts are now run through Microsoft AdCenter. When ads are displayed on Yahoo now, it is powered by Microsoft AdCenter and is run through the Microsoft software interface.
AdWords account management
To help clients with the complexity of building and managing AdWords accounts search engine marketing agencies and consultants offer account management as a business service. This has allowed organizations without advertising expertise to reach a global, online audience. Google has started the Google Advertising Professionals program to certify agencies and consultants who have met specific qualifications and passed an exam. Google also provides account management software, called AdWords Editor.
Another useful feature is the My Client Center available to Google Professionals (even if not yet passed the exam or budget parameters) whereby a Google professional has access and a dashboard summary of several accounts and can move between those accounts without logging in to each account.
The Google Adwords Keyword Tool provides a list of related keywords for a specific website or keyword.
Google Click-to-Call
Google Click-to-Call was a service provided by Google which allows users to call advertisers from Google search results pages. Users enter their phone number, Google calls them back and connects to the advertiser. Calling charges are paid by Google. It was discontinued in 2007. For some time similar click-to-call functionality was available for results in Google Maps. In the Froyo release of Google's Android operating system, in certain advertisements, there is a very similar functionality, where a user can easily call an advertiser.
History
The original idea was invented by Bill_Gross_(entrepreneur) of Idealab who, in turn, borrowed the idea from the model of the Yellow Pages. Google wanted to buy the idea but a deal could not be reached.[citation needed] Not wanting to give up on this form of advertisement, the company launched its own solution, AdWords in 2000. AdWords followed a model that was significantly similar to Bill Gross' creation which led to legal action between the two parties. Eventually the dispute was settled out of court.
At first AdWords advertisers would pay a monthly amount, and Google would then set up and manage their campaign. To accommodate small businesses and those who wanted to manage their own campaigns, Google soon introduced the AdWords self-service portal. Starting in 2005 Google provided a campaign management service called Jumpstart[18]. Google's Jumpstart program offers free telephone support from a Google specialist to help users start their online advertising campaign.
In 2005, Google launched the Google Advertising Professional (GAP) Program to certify individuals and companies who completed AdWords training and passed an exam. Due to the complexity of AdWords and the amount of money at stake, some advertisers hire a consultant to manage their campaigns.
In 2008, Google launched the Google Online Marketing Challenge (http://www.google.com/onlinechallenge/), an in-class academic exercise for tertiary students.[20] Over 8,000 students from 47 countries participated in the 2008 Challenge, over 10,000 students from 58 countries took part in 2009, about 12,000 students in 2010 and almost 15,000 students from 70 countries in 2011. The Challenge runs annually, roughly from January to June. Registration is at the instructor rather than student level.
In 2009, Google revised the AdWords interface, introduced Local Business Ads for Google Maps and Video Ads.
Legal context
AdWords has generated lawsuits in the area of trademark law (see Google, Inc. v. Am. Blind & Wallpaper Factory and Rescuecom Corp. v. Google Inc.), fraud (see Goddard v. Google, Inc.), and click fraud. In 2006, Google settled a click fraud lawsuit for US$90 million.
Overture Services, Inc. sued Google for patent infringement in April 2002 in relation to the AdWords service. Following Yahoo!'s acquisition of Overture, the suit was settled in 2004 with Google agreeing to issue 2.7 million shares of common stock to Yahoo! in exchange for a perpetual license under the patent.
Technology
The AdWords system was initially implemented on top of the MySQL database engine. After the system had been launched, management decided to use Oracle instead. The system became much slower, so eventually it was returned to MySQL The interface has also been revamped to offer better work flow with additional new features, such as Spreadsheet Editing, Search Query Reports, and better conversion metrics.
Ad content restrictions
As of April 2008 Google AdWords no longer allows for the display URL to deviate from that of the destination URL. Prior to its introduction, Google paid advertisements could feature different landing page URLs to that of what was being displayed on the search network. Google expounds that the policy change stems from both user and advertiser feedback. The concern prompting the restriction change is believed to be the premise on which users clicked advertisements. Users were in some cases, being misled and further targeted by AdWords advertisers.
As of December 2010 Google AdWords has decreased its restrictions over sales of Hard Alcohol. It now allows ads that promote the sale of hard alcohol and liquor. This is an extension of a policy change that was made in December 2008, which permitted ads that promote the branding of hard alcohol and liquor.
Allowed keywords
Google has also come under fire for allowing AdWords advertisers to bid on trademarked keywords. In 2004, Google started allowing advertisers to bid on a wide variety of search terms in the US and Canada, including the trademarks of their competitors and in May 2008 expanded this policy to the UK and Ireland. Advertisers are restricted from using other companies' trademarks in their advertisement text if the trademark has been registered with Advertising Legal Support team. Google does, however, require certification to run regulated keywords, such as those related to pharmaceuticals keywords, and some keywords, such as those related to hacking, are not allowed at all. These restrictions may vary by location. From June 2007, Google banned AdWords adverts for student essay writing services, a move which was welcomed by universities.
Google has other restrictions, for example the advertising of a book related to Facebook was restricted from advertising on AdWords because it contained the word "Facebook" in its title — the rationale being that it was prohibited from advertising a book which used a trademarked name in its title.
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