Google Changes Its Ad Program to Try to Solve the Mobile Ad Riddle
By CLAIRE CAIN MILLER
Google has a mobile problem, and it is trying to fix it.
Searches on desktop computers, Google’s most lucrative way to sell ads, are slowing. Searches on mobile devices are increasing, but mobile ads cost less.
The result has been that an important business metric for Google — the amount that advertisers pay each time someone clicks on an ad — has declined for five quarters in a row.
This week, Google tried to reverse this trend by introducing one of the biggest changes in years to its AdWords program, which it called enhanced campaigns. The program, which will thrust advertisers onto mobile devices, has become the talk of the ad industry, and some advertisers are already protesting against it.
Until now, advertisers have had to create separate campaigns for different devices and audiences. Now, they will create a single campaign and give Google directions about how they want to target the campaign by bidding higher on certain devices, locations and times of day. Then, Google’s algorithms will place the ads.
Say a pizza restaurant in San Francisco wanted to advertise. If someone searched for “pizza” using a computer at noon in the financial district, Google might show an ad with a link to the take-out menu. If someone did the same search on a cellphone at 8 p.m. a half-mile from the restaurant, Google might show a click-to-call ad and walking directions.
The theory is that the distinctions among devices have blurred. People use their phones on the sidewalk and on the sofa, and switch indiscriminately between tablets and computers. Now, according to Google, context is most important, like time of day and whether someone is on the go or at home.
The change will make things simpler for some advertisers, and enable many who did not have the resources to try mobile advertising to jump onto mobile devices.
But many advertisers are also complaining. Google’s ads are sold in an auction system, and mobile ads have been less expensive partly because their demand has been relatively low. But now all Google ad campaigns will include mobile devices by default (though advertisers can opt out of mobile.) This will drive more bidders into each auction and likely forcing up mobile ad rates. This is good for Google but disappointing to advertisers.
Some advertisers also say they do not want to lose their fine-grained control over their ad campaigns and cede that control to Google. For example, iPad users generally spend more on e-commerce sites than users of other kinds of tablets, so many retailers showed ads only to iPad users, but now they will lose that option.
Like any change Google makes to its advertising rules, this will force advertisers — who, following Google’s previous instructions, have spent money and time creating separate campaigns for separate devices — to revise their ad campaigns for the new, multi-device era.