March 29, 2015

Google AdWords Enhanced Campaigns: The Benefits, Drawbacks and Implications

Today Google announced enhanced AdWords campaigns, a significant upgrade that gives local businesses more flexibility and control in how they reach consumers. It also highlights Google’s desire to make mobile advertising more appealing to small businesses.

Google AdWords logo

What’s new?
The new enhanced campaigns essentially offer businesses the ability to streamline and fine-tune their AdWords campaigns to deliver relevant and timely ads based on signals like their location, time of day and device type. Google offers this example:

A breakfast cafe wants to reach people nearby searching for “coffee” or “breakfast” on a smartphone. Using bid adjustments, with three simple entries, they can bid 25% higher for people searching a half-mile away, 20% lower for searches after 11am, and 50% higher for searches on smartphones. These bid adjustments can apply to all ads and all keywords in one single campaign.

Another key feature of enhanced campaigns is optimization for varying user contexts. For example, a business with physical locations and website can show ads with click-to-call and location extensions to users searching on their smartphones; users searching on a PC will be shown an ad for the company’s e-commerce site. This can now be done in a single campaign.

Also included in the rollout of enhanced AdWords campaigns is advanced reporting to measure new conversion types – i.e., calls and app downloads. “You can count phone calls of 60 seconds or longer that result from a click-to-call ad as a conversion in your AdWords reports, and compare them to other conversions like leads, sales and downloads,” Google explains in its announcement.

The benefits
At first glance, this update to AdWords appears to be a big win for local businesses looking to spend dollars on mobile ads. Consequently, these new features will likely boost Google’s mobile ad revenue, which eMarketer projected (before today’s announcement) to be nearly $4.0 billion this year, or 57.1 percent of the U.S. mobile advertising market.

“Google’s new enhanced campaigns represent the biggest single change in the past 10 years to the basic structure of AdWords campaigns,” says Larry Kim, founder and CTO of WordStream. “Mobile search has been growing incredibly quickly – it’s actually expected to outpace desktop search by next year. But Google has had a big problem monetizing that traffic.”

Kim cites the complicated nature of setting up mobile campaigns as one reason for Google’s difficulty monetizing mobile traffic. He says the new structure of AdWords campaigns simplifies targeting and bidding for different mobile devices and locations.

“It’s a win-win for advertisers, Google and its shareholders,” he says. “Now even small companies can benefit from the exciting opportunities in mobile search.”

Geoffrey Grauer, CIO, COO and co-founder of Pontiflex, echoes this sentiment. “Google’s new ad format is an innovative step that maps neatly with consumer behavior as people complete tasks, or even one task, across multiple devices,” he says. “Given how advertisers will be able to vary bids based on time, context and location, enhanced ads address a pressing problem and are a great step forward for the advertising industry.”

However, Grauer notes one potential concern for enhanced AdWords campaigns: privacy. “As long as Google deploys this new endeavor in a privacy-compliant way, this new endeavor will be welcomed by national and local advertisers alike.”

Google AdWords enhanced - exampleThis announcement also brings Google up to speed with a new and improved revenue and ad distribution model that’s focused on mobile, according to Ori Carmel, vice president of performance strategy for MediaWhiz. It also brings the advertising and marketing industry one step closer to a “comprehensive interconnected attribution model of consumption,” he says. “That’s the holy grail that marketers have been searching for since the dawn of modems.”

Carmel adds that while Google has yet to answer questions about this update, enhanced campaigns brings the industry closer to understanding how consumers make decisions and what role different devices play in that process.

“B2C companies stand to benefit the most from this new feature, as their business depends on geo-location more than technology or health care,” says Stephen Corsi, vice president of digital marketing at LEWIS Pulse. “Depending on a user’s device, time of day or location, a retailer or restaurateur can tailor an ad to ensure awareness of their product offering. Users will benefit from the new enhancements because they will not have to scroll through pages of results in order to find what they need. If they are looking for Italian food near 123 Main St., the new service will allow local establishments to be first up on the search results page.”

The drawbacks
Performics was one of the partnering companies that were part of the beta testing of the enhanced AdWords campaigns. Daina Middleton, global CEO of Performics, says one of the takeaways is that advertising budgets will have to increase by 3 percent to account for the new changes in order for advertisers and marketers to achieve the same returns and effectiveness they have had until now.

“Everything is more inclusive but more expensive as well,” Middleton says.

“Many features are excellent additions to AdWords functionality: the bid boosting, sitelink management and new reporting features will help advertisers evolve their view of paid search more in line with that of an omni-channel strategy,” says Jeremy Hull, associated director of paid search at iProspect. But he sees some drawbacks to the announcement, too. While he says this move is an example of Google doing what’s best for advertisers, Hull also notes that “they’re not just opting you into a setting by default – they’re removing the option of opting out.”

He adds that the benefits of the new features are counterbalanced by the removal of the device targeting functionality that’s currently offered by AdWords. “Advertisers will no longer be able to target or exclude devices – desktops, smartphones, tablets – at the campaign level. All keywords will trigger ads across all devices.” This is a concern Middleton also points to.

Hull also says that while the bid-boosting and bid-stacking features are powerful, they present potential pitfalls for advertisers or agencies that don’t properly learn how to use them. “While easy to set up, they can quickly become complicated.”

Corsi adds that a potential downside for enhanced campaigns is the lack of integration with social channels and the need to address the potential challenges presented by social ads (i.e., Facebook graph search).

The takeaways
Advertisers will have to tailor their copy to smartphones and desktops. Also, since tablets will now be considered “desktop,” advertisers can no longer drive ads to tablet-specific landing pages. “More importantly, because there’s no ability to opt-out of tablets, advertisers without tablet-optimized sites will be challenged in capturing and converting traffic,” notes Performics in its opinion on enhanced AdWords campaigns. This means websites with responsive Web design are in a good position to succeed.

Also, advertisers will now get one combined quality score, which is no longer based on keyword per devices but based only on keyword.

Mobile cost-per-clicks (CPCs) are set to rise as a result of these changes. Kim expects mobile CPCs to be the same as desktop CPCs once all AdWords accounts are upgraded, due to increased competition and auto-set mobile bid adjustment factors.

Performics echoes this expectation. The company notes that in December, smartphone CPCs were 35 percent of desktop CPCs. “By eliminating the distinction between smartphone quality score and desktop quality score, as well as increasing competition in mobile by opting all campaigns into mobile, Google could possibly normalize CPCs across devices, potentially pulling up smartphone CPCs, thus overall CPCs.”

The possibility of higher mobile CPCs as a result of more advertisers bidding on smartphone searches also means mobile-optimized websites are mandatory, not optional, for advertisers, according to iProspect.

All AdWords advertisers will be able to upgrade their campaigns to take advantage of the enhanced features at the end of February. Google has set late June as the tentative time when all campaigns will be upgraded to enhanced campaigns.

Read Google AdWords’ guide to upgrading to enhanced campaigns here.

By Jason Hahn

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