When Google changes the game it's important to pay attention!
As we see it there are two changes afoot:
- Max CPC will be used instead of Avg CPC in conjunction with Quality Score to determine rank.
- There will be a new minimum CPC applied for Top Placement.
The first of these fixes a bug in their logic and should help retailers. We certainly noticed instances in which newly launched keywords would essentially never gain traction and end up with $10 minimum bids to stay active. This was probably a function of Google looking at the actual CPCs rather than our bids when determining initial placement. We think this change will fix this type of problem.
The second, slipped in at the end of the announcement, is more troubling.
- Does it mean that those beautiful sku-specific terms that have historically converted well at low cpcs due to lack of competition will face higher cpcs in order to show at the top?
- Does it mean that cpcs on trademark terms will now go from 5 or 10 cents to $0.50 or more?
We don't know. Hopefully, Google will be smart in how they apply this threshold, but we'll have to wait and see.
Stay tuned, and be vigilant!