Google just made a crucial change to the core of its business, a change that will ripple out to neighborhood businesses around the world and affect how millions and millions of people find information while using their smartphones. But it’s a change that’s been mostly ignored because it’s been described in the cryptic language of online advertising specialists.
The big overhaul was made within AdWords, Google's bread and butter. AdWords contextual advertisements, which appear alongside Google.com search results, account for fully two thirds of Google’s revenue. They appear alongside virtually all web searches conducted on mobile devices and alongside the vast majority of web searches conducted on desktop computer. They provide the money that underwrites most Google projects, from the Google Plus social network to the Android mobile operating system to the Google Glass heads up display.
"This is the biggest change to Google mobile advertising for the last five years."What Google has just done is to make it much easier for advertisers to run coordinated mobile and desktop AdWords campaigns and for them to target users based on their location, time of day, and other factors, capabilities that used to be technically possible but far outside the reach of small and medium sized businesses. The new capabilities, embedded in a remade advertiser interface and dubbed “enhanced campaigns” by Google, hasn’t registered outside of the advertising industry since being announced Wednesday.
But ad experts believe the impact will be seismic.
“This is a really big issue – the biggest change to mobile advertising on Google for the last five years,” says Larry Kim, co-founder of ad management firm WordStream. “What you’ll get is more advertiser adoption of mobile search because it’s more accessible in a more scalable way.”
Previously, the largest and most sophisticated advertisers could use Google AdWords to assemble complex campaigns in which they paid different amounts to reach mobile users vs. desktop users. Mobile users got specialized content like click-to-call appeals, and different ads were shown to people based on where they were and what type of mobile device they were using. But those extras also meant extra work. Adding a new angle on which to target ads often meant creating a whole new campaign; distinguishing desktop from mobile and nearby users from far away users would entail four different campaigns. Adding different ads for daytime and nighttime would mean maintaining eight different campaigns.
What Google has done is to allow a single campaign to contain different wording for smartphones versus desktops, different wording for different user locations, and different wording for different times and other factors. Advertisers can further specify “bid adjustments,” paying, for example, a 200% premium for smartphone users within a mile of the business, a 100% premium for desktop users within a mile of the business, and cutting payments 50% for clicks from users searching after the business has closed down for the day.
If that sounds like an obvious improvement, it is. The old system was “getting a little ridiculous,” says Kim, who wrote a lengthy blog post detailing the new AdWords improvements .
Yet for all its continuing complexity, Google has done far better than many tech companies at navigating a big shift in computing from desktops to mobile, acquiring and developing what is now a leading mobile operating system, Android, and snapping up AdMob, a top player in mobile advertising. The fact that Google has finally made AdWords truly mobile friendly is seen as another savvy response – better a bit late than never.
“Google has put a stake in the ground and said the desktop is as obsolete as the fax machine; everybody is going to have a desktop machine, but people are going to use it rarely,” says Richard Zwicky, CEO of digital marketing agency BlueGlass. “AdWords has been a phenomenal platform, nobody can take anything away from that, but over the last 10 years there have been so many iterations… There is so much in there that they took a step back and said, the market is going to mobile, we’re going to dominate the platform that mobile rests on. Let’s revisit what we’ve got and make everything mobile.”
Google, of course, is not doing this out of charity or goodwill toward America’s small merchants. The new AdWords stands to significantly goose Google’s bottom line, in part through some neat tricks that should close the price gap between mobile and desktop ads: Advertising campaigns must now include both desktop and mobile components, and Google by default will set a premium/discount adjustment for you based on the content of your ad. If you really want to opt out of one channel, you can always set a “bid adjustment” of negative 100 percent, but smaller advertisers are often confused by such “hacks” and just go with the default.
Google’s new AdWords tools could prove to be a monster, growing both its own earnings and those of participating businesses. Only time will tell. But there’s no disputing that the stakes are high.
