Google remodels top secret money machine

Minimum Bid: RIP

AdWords serves up text ads in response to Google keywords searches. Google bills it as an auction. You bid for a particular keyword or group of keywords - "leather mask," for instance, or "my little pony" - and if you bid high enough, your ad will appear each time someone searches on those terms. The winning bidder gets the top spot on the page, the second place bidder gets the second spot, and so on. And if your ad actually gets a click, you pay Google a fee somewhere south of that bid.

But this isn't an eBay-style bid-off. Before you bid, Google gives you a "quality score," and if your quality score is low, it may restrict your ability to place ads. In some cases, Google prevents you from bidding at all. In others, it saddles you with a high minimum bid. And even if you can afford that minimum, a low quality score may bar you from top ad spots. You see, Google doesn't determine auction results with bids alone. It calculates ad spots by multiplying your bid and your quality score.

At least, that's the way it works now. With an official post to the Official Inside AdWords blog, Google says it will soon revamp the quality score.

First off, AdWords will now calculate this mystery number in real time, as the searcher is searching. According to Google, this will better match ads to particular queries. "AdWords will use the most accurate, specific, and up-to-date performance information when determining whether an ad should be displayed," the blog reads.

"Your ads will be more likely to show when they're relevant and less likely to show when they're not. This means that Google users are apt to see better ads while you, as an advertiser, should receive leads which are more highly qualified."

At the same time, AdWords will no longer bar "low quality" ads from particular keyword auctions, and it will do away with the minimum bid. Instead, it will give you a "first page bid," estimating what it would take to land your ad on the first page of search results.

The way Google tells it, all this will improve its ability to geo-target ads. To wit, your real-time quality score may go up or down depending on where the searcher is searching from. But in dropping the barriers that so often prevented advertisers from even joining an auction, Google may be expanding coverage as well, slipping more ads into its less-coveted ad spots.

An AdWords Ad

But who knows? As always, Google keeps the particulars hidden. "We can guess that Google wants to increase its revenues and that's what's going to happen," says Brian Carter, an AdWords consultant with the South Carolina-based search engine marketer Fuel Interactive, "but judging from the information we have, it's really hard to say."

At the very least, the changes will result in more advertisers placing bids. And Google reserves the right to do whatever it likes with those extra bidders. Place them on a page. Or not.

In other words, Google has even greater freedom to turn that dial.