Some interesting data last week from Efficient Frontier on Search Advertising click-thru rates (CTR). EF quantifies the disparity between CTR on contextual and search advertising (search is 31x greater). Most interesting to me however was the chart below on Search CTR.
Take a look at Google. You can see there was a CTR decline on Google ads until September when things turned around and have continued to improve — making up 8 months of losses in half that time. CTR now shows a year-over-year increase.
What happened in September?
Google made changes to its quality score (QS) incorporating more landing page factors. Regular readers will recall I predicted even more of this in 2008.
Here is all Google had to say formally on the September 2007 changes. In brief they did this to squash the following:
• Data collection sites that offer free gifts, subscription services etc., in order to collect private information
• Arbitrage sites that are designed for the sole purpose of showing ads
• Malware sites that knowingly or unknowingly install software on a visitor’s computer
Going back and checking initial reaction on the blogosphere (and my own recollection) opinion on the change from an advertiser perspective was very negative. Here’s a long post by Marc Grote who leads internal SEM for many Microsoft properties. Marc rails against the changes and sites examples from Hotmail and Games. Microsoft buys lots of ads on Google.
In contrast to advertiser outrage the chart shows the QS changes in September had the intended effect of improving ad relevance. It also shows that while QS was a big winner in driving revenue in 2006 there were some bumps in the road in 2007 as Google attempted to add more data into the QS algo (though it seems they made up the bottom line difference in higher CPCs).
I expect the quality score troika of keyword, ad and landing page to continue to fuel Google’s bottom line. With so much at stake it’s more important than ever to understand how each element impacts your performance.