I remember when the broad match change occurred and minimum bids suddenly went up. It actually felt like a science experiment. They prompted you to up your bid to another level to make the term active. When you did it would then prompt you to up it even further to make it active.

At the time, we took one Ad Group and behaved like rats and upped our bids until they were active. For another we simply refused to budge. In time, say one week, the Ad Group we didn’t boost bids on returned to an active state.

We were told that the tiered bid structure we encountered was a glitch. I’m not sure if it was or not, but even if it was, they had results of a price elasticity test on a wide range of keywords.

I would also assume that the minimum bid does change on a seasonal basis. I doubt that it’s arbitrary, but is instead likely a data model based on prior years advertising behavior.

Lets face it, many advertisers went into PPC with the insane desire to be number one on the term, without really looking at the ROI. A flood of unthinking advertisers, or brand advertisers who didn’t need ROI, helped propel CPC inflation.

If what you say about the shipping window is true, then Google has done some manual keying that will adjust the minimum bids based on demand. I don’t really blame Google for this. They should get a bit more during the holiday season when everyone else is making bank. But I’d like Google to say they adjust bids seasonally and they are currently, IMO, pricing too many out of the game. The Google Tax is just too high.

The Analytics data is just not part of the equation in my opinion. They have other ways to get correlated data. CTR rates. Percentage of clicks that return to the SERP. Historic data from the PPA program. Aggregate benchmark data (given willingly) via Google Analytics.

So we agree that Google tracks effectiveness and uses it as a way to influence bid prices, but disagree on how they collect that data.

The impact of Organic Search and AdWords has always been intriguing but – like you – I’ve seen no proof.

In talking to folks at Google I think they certainly are committed to the best Organic experience but are also savvy business people. I don’t ascribe malice to their efforts. They’re looking to make money just like any other business. (I mean, why hasn’t Amazon told us how many Kindles have been sold?!)

The problem lay in the lack of transparency and the mantra of ‘Don’t Be Evil’. I like Danny Sullivan’s request to be rid of the bid black box – and go back to the old Overture style transparency. I think that would go a long way to repairing trust and push CPCs down to a level where both sides win.

This was very obvious for a Gazebo manufacturer whose account I managed. One by one their specific keyword phrases were targeted by those bidding on broad match. They made some unusual shapes (rectangular, oval) and we targeted many long-tail phrases (cedar, pine, etc.).

Where they originally could buy clicks for under $0.25 a click eventually they would have had to bid $1.00+ to get anything on the front page. Worse, if you really wanted an oval gazebo all you see are ads for companies that don’t actually sell them so you can’t find one.

I saw this in other accounts. New phrases that had never been used are very profitable for a while – until Google adds them to the generic phrase and targets broad match ads at them.

I will disagree on Google using analytics data. They already increase bids during the holidays, especially on holiday related products. If they’ll do that why wouldn’t they raise bids artificially on keyword phrases they know are converting?

I can guarantee you that they are indeed inflating the bid prices during the holidays as I verified it in numerous AdWords accounts. Until about a year ago I had all the ppc work I could handle at $100/hr cash in advance. I worked primarily with tiny ($100-$500 /mo spend) to very small businesses (Up to $10,000/mo spend).

Some of those businesses were holiday-centric. Their keywords were running at bids under $1.00 a click until right after Thanksgiving. Prices did not go up gradually as they would if humans were raising their bids or even if bid management programs were bidding keywords up (reacting to other bids).

As an example, they might go from $0.75 to $5.00+ in one day. Some keyword phrases we had no competition on would stop displaying until we bid $5.00 and a few would not show up even at a $20 bid for a $24 item. (I just wanted to see if they would – no profit in bidding like that.)

Then they all dropped back down several days before the last day you could ship products without paying for expedited shipping. No businesses would actually drop their bids BEFORE the end of regular shipping – and most would be too busy to be adjusting their bids then.

Matt Cutts even admitted that Google set minimum bids. I sure wish I had saved that one link or a copy of that page. I’ve wanted it several times including when I wrote that ppc post.

I no longer accept money for managing ppc accounts because I do not have the resources to build the system I believe it would take to adequately protect advertisers from the ppc engines. That would require using something like ClickTracks (now Lyris) to monitor ROI and a Bid Management program to immediately stop spending.

Even that might not work because Google once showed the most expensive ads close to the ad groups you paused so there is no guarantee they wouldn’t do that again. During that time the more you tried to tighten spending the more it would spiral out of control while ROI crashed (because the ads shown cost more and since they were landing on the wrong pages they converted poorly).

I do a little advising here and there and dabble with exact match only for one blog we have. I am hoping that my new favorite search engine DuckDuckGo will catch on and add ppc. I’m putting them in touch with the people who were behind the original GoTo / Overture.

The post I did on Organic Search included posts from ProBlogger showing drops in their search placement three times – all three just before the holidays. Many believe that when they paused their AdWords their organic listings dropped. I haven’t seen anyone actually post proof; however, it certainly would NOT surprise me.

At the time, I was running a very long-tail PPC program (1MM+ keywords) and suddenly those highly targeted keywords were overtaken by less relevant keywords. I argued that it was clearly not in the best interest of the user, but short-term revenue maximization seemed the goal at the time.

It would be very interesting to see Google roll back that change. It would solve the problem you mention regarding smaller businesses seeking to use Google to drive ROI positive traffic. In essence, the Google Tax has simply become too high for many to afford.

I don’t think Google will use Analytics data directly but there are other ways they can gather information to inform both the algorithm and bid prices.

The holiday season is a bit of a mystery. Clearly there is increased demand during this time which would naturally increase the CPC. The problem is that there is no transparency (I pine for the old Overture days).

So we don’t know if there is subtle price manipulation going on or not. I’ve encountered a few instances that make me think there is – but have later found resolution or helped to uncover bugs within the pricing mechanism.

Bottom line, PPC is a much different animal than in was in 2003. It is far less profitable and is usually successful for those who really understand and actively manage their own programs.

1) Expanded broad match makes the ppc ads being displayed LESS relevant – FAR less relevant! Google continues to ruin high converting phrases by pushing those who actually sell the items targeted off the page by forcing them to outbid generic ads. When the clicks are no longer profitable this is not economically viable. The original broad match worked well; expanded broad match does not and now even phrase match is dangerous.

2) PPC Engines and especially Google have strangled the life out of their Golden Goose by feathering their nests at the expense of their advertisers. Where I once recommended every small business run highly targeted ppc ads indefinitely and charged $100 an hour to manage those campaigns, today I do NO ppc work because I can not protect those same small businesses from rampant dishonesty: distribution fraud, traffic that will never convert, artificially driving bid prices up at critical times (such as the holiday shopping season), displaying ads for generic searches and on parked domains.

It is highly likely that Google will use the data in Google Analytics to drive bid prices up on converting phrases whenever their stock price needs a boost. I have explained all of these issues more clearly in a blog post called We Miss the Golden Days of PPC Circa 2003.

They also love to shuffle the organic results during the holiday season. (See another of my most popular blog posts “Why You Can NOT Rely Solely on Organic Traffic. I have linked it to this comment to make it easy to locate. I hope you don’t mind.

Both of the posts I mention in this comment stay continually in the Most Popular section in the right sidebar of my blog – for good reason!

P.S. I found you because @MikeTek recommended you for #followfriday at Twitter. Now that I know where you are I’ll be adding links to your blog to related posts and sharing your work at Twitter, FriendFeed and cliKball.