Google factors clicks into AdWords

Launched in February, AdWords lets advertisers bid for placement in search results on Google, related to specific keywords. The ads appear as "sponsored listings" alongside traditional search results. The program also syndicates the sponsored listings, along with the nonpaid, algorithmic search results with which they appear, to Google partners including America Online (AOL) and EarthLink.

Unlike many traditional paid advertising programs, Google monitors the keyword ads for traffic and de-emphasises advertisements that fail to garner hits, in an effort to keep results relevant to site users' interests.

Google on Thursday added three new features to AdWorks, most notably a conversion tracking tool that lets customers measure how effective their paid links have been in generating site traffic and online transactions. Other upgrades included expanded matching functionality -- allowing advertisers to cash in on keyword searches related to the terms they have paid for -- and a lowered click-through threshold, meant to protect certain ads from the perception that they are less relevant than they might actually be. All three features are free to Google's estimated 150,000 AdWords customers.

"We really want to do as much as possible to provide advertisers with information to see how their ads are working," said Salar Kamangar, director of product management at Google. "It's a matter of simplifying the process and allowing advertisers to make more effective buying decisions while keeping the ads as relevant to users at the same time."

The improved matching technology will help AdWords advertisers benefit from searches on terms closely related to keywords they have already paid for, the company said. These include synonyms, similar phrases and misspellings.

While some might question why the search engine provider was unable to make the seemingly simple correlations in the past, Kamangar said Google only recently perfected the technology necessary to ensure that related matches delivered accurate results for both advertisers and site users.

The increased click-through threshold is designed to help ads that may have struggled for traffic due to poor search relevance. These include those related to contextual ads that for some reason continue to confuse the search engine, such as an ad for Lincoln-brand automobiles that repeatedly pops up when Google users are looking for information on Abraham Lincoln, and therefore result in poor traffic generation.

Industry analysts and Google AdWords customers agreed that the conversion tracking enhancement is probably the most valuable upgrade. Gartner analyst Denise Garcia lauded the company's ability to give advertisers more information on how effective they've been at targeting the right keywords.

"Any additional opportunities that (Google) can create for advertisers is good for the customers and the market, and they continue to stress relevance to users as a priority," Garcia said. "I don't think that showing advertisers which keywords have not worked will result in those customers buying fewer ads, but rather in being more satisfied with how they continue to invest."

One AdWords customer testing the upgrades, nonprofit credit counselling firm Money Management International, openly admits that the additions have made its investment with Google more valuable than the contextual ads it pays for with the search company's rivals, including Overture Services and LookSmart.

"The others can't compete with Google on sheer volume, and this increased ability to gather data to drive decision making and return on investment truly allows us to see what works," said Chris Ray, marketing director at the financial services company.

One question raised by use of the conversion tracking system is how it might affect people's privacy, as advertisers can now see how they move through their Web sites after clicking through from a keyword ad.

However, Google maintains that it offers more noticeable evidence of this process than its competitors do. The company said it is requiring AdWords customers using the tool to put a specific logo on certain transaction-oriented pages of their Web sites that individuals can click on for information regarding how their activity is being monitored.

One flaw that Gartner's Garcia sees in Google's overall business model is that it depends too heavily on several of its largest search partners, including AOL, to generate income. Garcia said the more dependent AOL becomes on Google for advertising revenue, the more likely it is that AOL will attempt a buyout of Google, just as rival Yahoo recently purchased Overture Services.

Garcia said Google must also consider that competitors, such as Microsoft with its ongoing search engine development effort, are watching Google's strategies closely and creating programmes that will offer advertisers similar benefits, thereby cutting into the company's potential for future revenue growth.