Diorex

Had an issue with Google today that pissed me off so much, I decided to blog about it so that others can avoid the problem.

Basically we had a server issue this morning and while everything was being sorted out, we went to all of our PPC campaigns and paused the traffic so we were not paying for clicks that were gonna go nowhere. Google makes this very easy, you can click the little white button under pause on the summary page which selects all of your campaigns and then click on pause and it is basically a quick way to pause lots of campaigns.

Once the problem was fixed we reversed the process by clicking the white button and clicking on resume, quick 30 second restart to the account.

About an hour later, one of my analysts noticed that an ad campaign that we had not run traffic to in over 2.5 years was getting clicks. We then saw that half a dozen or more of our Deleted campaigns had somehow received clicks and impressions - one campaign at almost $10 per click. To make it worse, our tracking link scheme had changed and all of these clicks were either going to dead pages or to websites we dont even own or have relationships with anymore.

We quickly paused all of these campaigns and sent a note to our Google reps letting them know about the problem with their system and asking for a credit for the $3200 or so in clicks we got on these deleted campaigns due to their system error.

A few hours later, we got a nicely worded note that said in the event of “user error” Google would offer us a one time credit of half of the problem.

Hold on a second - User Error? From the campaign summary screen the status of each of these campaigns reads in big red letters as it did before, during and after the issue - DELETED, from the ad group summary screen each adgroup had a status of “Ad Group Deleted” once again in red letters, and from the individual adgroup pages, right next to the ad box, it once again said Deleted in red letters. So on three screens I see prominently displayed in red a notice that the campaign, adgroup and ad are all deleted. I am very definetly not seeing user error here.

Google explained that since I had selected all campaigns and hit resume that they interpreted the request to apply to all ads in the entire account regardless of campaign, adgroup or ad status.

Quick aside on Webster’s dictionary definitions of certain words -

Deleted : to eliminate especially by blotting out, cutting out, or erasing

Resume: to return to or begin again after interruption

The first word clearly implies permanent, the second clearly implies restarting after a break (which could also be considered to be a pause).

Google does not allow users to actually DELETE a campaign, despite flagging campaigns as such, in fact for their purposes there is little real difference between Delete and Pause.

The money means almost nothing, it was a tiny fraction of my spend with them today and will hardly affect my profits at all. The principle on the other hand means quite a bit.

Here is a company that holds itself out as holier than thou, yet at every turn seems to be willing to compromise its principles, which is a big part of the reason most advertisers I know are rooting for Yahoo, or Facebook, or Microsoft or pretty much anyone to actually compete with Google. They are a monopoly and act like one frequently.

In closing (and the reason for the post in the first place - other than to vent some frustration), how can you prevent this from happening to you?

First off find all the deleted campaigns or adgroups in your account, then go and change the maximum bid to $.01. That way if you accidentally resume something you have deleted you will probably get very few impressions or clicks.

Pretty easy actually but it should not be required.

They basically tricked us out of $3200 from in a few hours and who knows how much from others over time, by being intentionally deceptive about the function that is pretty universally understood to not mean temporarily. When was the last time you thought, I ought to hold on to this item in case I need it again, I will just delete it.

Have yet to really see anyone screaming about this, but then again I have not been looking that hard…

I was in SF this week meeting with both Google and Facebook and as a throwaway Google dropped the bomb that they are no longer allowing multiple domains in the same adgroup. Adwords Blog talks about it here.

What this means to the average affiliate marketer is that you no longer can test which Display URL (DURL) works best for you.

Lets take an extreme made up example of a dating site with the goal of a credit card sign-up.

If your DURL is FreeSex.com then you will get lots and lots of clicks which Google loves and thus your CPC will go way down but your conversion rate will be horrible since the DURL implies free when a sign-up is required.

What about a DURL of FatUglyChicks.com? You probably get very few clicks, meaning your CPC goes up, but someone desperate enough to click on that ad is probably pretty likely to convert since they have been somewhat pre-qualified.

This is nothing more complicated than an algebra problem - does lots of cheap clicks with a bad conversion work better than more expensive clicks with great conversion. As a marketer you really only care about the bottom line here.

This is an extreme example, but for a dating site there are literally millions of different possible combinations for URLs - some of which are naturally more likely to succeed than others.

Google used to allow you to test lots of URLs in a single adgroup and rotate those ads to get equal impression so that you could determine which URL worked best for your metrics.

The new revised version of the DURL policy now requires you to set up different URLs in different adgroups - meaning that even though you might be bidding on the same keyword that Google’s algorithm now decides your quality score and will not evenly rotate them and ultimately end up serving the ad that meets Google’s best interest.

Unfortunately this is short sighted for Google. I have a URL that is awful - no one would think it would win in a test, yet for some reason it resonates well with consumers and qualifies them and induces them to click frequently as well as convert - great combination.  Without testing, we never would have found this hidden gem that allows us to pay Google millions of dollars per month. Without testing, Google would have chosen a better clicking DURL and I would have never optimized my business - which ultimately optimizes Google’s business.

Any one else concerned about this change?

It has been so long since I have had a new account at Google, that I have not had to deal with many of the day to day hassles that many new marketers have to deal with. My team starts a new account, or a new ad group or make some changes and they get approved immediately, for as bad as my customer support level is compared to my spend it is world’s better than what the average marketer is getting.

Recently, I had an idea that led to us starting a test that produced low volumes of very high converting keywords at CPCs about 10% of what we normally pay because there is virtually no competition for those ads. It is worth high 5 figures annually to us, worth bending over and picking up, but not a home run. For most starting advertisers it would be a gold mine.

I took a look at the idea and realized it should work for other really long tail stuff outside of our particular niche and with the extraordianrily low CPCs I could probably make it work on standard affiliate commission payouts and maybe make some real money by automating and scaling it.

So I fired up a brand new Google account, paid my $5 and then uploaded a bunch of keywords as a test. Got an initial burst of traffic, then had the ads frozen by Google. I have seen this before, it typically means the ads are under review. So I did not panic, and waited.

3 weeks later, the account has not gotten a single impression since the first day.

I know google’s rules better than they do, all my ads are fully compliant, I am in programs that allow me to use search etc etc. My ad quality score is 8 or 9 across the board with a very few 7’s and nothing lower. I am not doing anything other than what Google wants advertisers to do - bid on keywords that are specific to the product and land customers on relevant pages about that product.

I can almost certainly get this fixed with a single phone call linking this account to my corporate ones, but since this is a side project I am hesitant to do so.

This post is not really about the fact that this is not working - it is that I know I have jumped through Google’s hoops and it is not working. I can only imagine how many countless plumbers or lawyers or affiliate marketers have been through this same process. Go to the trouble to create a website, open a google account and then have nothing happen and conclude that internet marketing does not work.

Internet marketing does work and those plumbers and lawyers should not be discouraged because Google has a screwed up ad system that they themselves dont understand. I sent a concise description of the problem to Google support thinking maybe I fell through some crack - the response I got back was - SURPRISE a canned response to a question I did not ask which told me to go to a page that was full of useless and vague information - fortune cookies are more specific.

I have done some searches and looked at some forums, and this seems to be a fairly common occurrence. I am having a hard time understanding how a company basically refuses to accept advertisers money?

Once again I know I can get it fixed because of my other activities but should I have to spend millions to get it fixed? How many profitable campaigns to Google and advertisers never get any traction? How much revenue is Google leaving on the table a few hundred dollars a month at a time?

I have had some change of heart on my Google Buy Reccomendation post and realized a small loss in getting out of my position - taking a loss is always better than thinking you will hold on until break even and is a hallmark of the difference between a professional and amateur trader - “your first loss is your best loss” is how traders talk about it.

Anyway, the reason for the change of heart are several:

• The prospect for an increased multiple is based on the growth of the company. How much growth is left for Google? They have utterly failed in creating any significant revenue stream other than Adwords and Adsense. YouTube is still up for debate and will probably work for them, but pretty much every other acquisition or new pursuit has sucked time and energy away from the core focus and failed to generate new revenues.
• Their acquisition strategy is haphazard at best - I dare anyone to see a pattern in what they have purchased - it is all over the board.
• Search is a pull technology - it is dificult to compel users to search more, sure the laser targetted ads have great rates, but is anyone in a developed country with internet access not aware of Google?
• Advertisers - 2 of the biggest online advertising verticals, Mortgage and Auto, are in the dumps. They are fighting for their very survival and are probably not seeking out new ways to spend money on Google (or anywhere else).
• Advertising Rates for search are up dramatically for roughly the same impression volumes as 3 years ago for us. No more or less people searching, but I have to pay significantly more for those clicks. This has drained the ROI from advertisers and made search yet another advertising tool rather than “The Tool”
• With lower ROI’s and limited reach combined with overall advertising slow down - other avenues like TV and direct mail are starting to look more attractive as those rates plummet - as they get cheaper and search gets more expensive I am strongly considering shifting some budget - even at a higher acquisition cost my reach is much higher - remember profit is volume X profit per sale, you can make less per sale and make it up in volume.
• For the first time, I am not in a buy all of it I can get position with Google - I now have other places to spend the money that get better returns on similar volumes - not really reducing my budget at Google, but not growing it either.
• Google’s arrogance - I have yet to meet a single Googler who really understands their system. Almost anyone reading this blog is smarter on Google’s advertising system than even the smartest Google employees. I would love to see comments with people saying - “No, google has made me lots of money with their on point and insightful reccomendations on how to better use their system.”
• Google’s over confidence - Here is a company that pretty much feels entitled to search. For 3 years, direct marketers who did not work with Google were not very good direct marketers. An entire industry was forced to work with them and has had collectively horrible experience with them - I dont know a single person using Google who would not like to have Google be a smaller piece of their business. That will bite them at some point when the next great thing comes along. I know guys who have far surpassed their Google spends in almost no time with Facebook and MySpace - whats next?
• Google has an employee problem - Google has tons of engineers who are the heart of the company who have either made tons of money or who are way under water, this disparity in wealth will be a growing problem. Why work at Google for below market wages when I can go to a start-up make about the same money and actually have a shot at being rich - the most talented are being woo’ed away every day.

I am not saying I would short Google, just realized after I made my trade a week or so ago that I did not like it. Dug into that intuition and saw a lot of things that did not mesh with my original analysis so I got out.

Because I am mad at Google about something totally unrelated, I figured I would keep the post streak alive and moan about Google some more…

I was doing some searches on the Google Keyword Tool the other day and one of my search terms was a trademark term and I found it interesting that there were no related keywords, just the brand name itself.

Here is a search for Intel - which yielded just a result for Intel itself.

Whereas a search for Capital One shows lots of related search terms that a trademark bidder would want to use to piggyback on the natural brand traffic.

Interestingly, if you dive deeper and type in related keywords they will show you the volume of that particular search term, but they still protect the brand.

Why do some brands get protection and others dont? Does it have to do with spend? or lawyers? is this available to smaller trademarks? I saw no pattern or rhyme or reason to why some brands or companies had protection and others did not, but obviously some are getting preferential treatment and others arent.

Any ideas?

Almost a year ago I suggested selling Google short.

Here is what the stock looks like since then courtesy of Google Finance.

I ended up shorting 100 shares at 704, but covered way to soon at 520, but that is not chump change.

I used to run a hedge fund and from time to time I make some bets, but I am almost always out of the market except for some retirement mutual funds. This year has been a great time to be out of the market.

The only other trade I made this year was long corn back in February and March and that was a nice win too.

Anyway, with Google now at $311 per share and trading at a PE below 20, I am starting to think about getting long again with no downside hedge. I will probably buy a few hundred shares with an exit price in the high 500’s.

Sure the growth has slowed way down, but there is still plenty left, mostly overseas, but also from Yahoo imploding and basically giving market share to Google.

A few other things I like - they are now starting to take ads on things they used to not in principle, like gambling outside the US or beer and liquor - this could be a few final last straws but I suspect there is some really good money there. They also have lots of talented people who are working for below market wages who now are totally underwater on options packages and thus they will need to work the stock to be able to keep them.

I suspect there are quite a few other levers that have not been turned by the financial guys at Google and now that growth has slowed, that these levers will be strategically pulled in time.

One other trade I am thinking of making is long Oil under $60 with an exit target around $90 in early summer - will probably cover that with some sort of options position in case oil goes to $40.

For those who have not heard, the Adwords tool is now giving approximate volume of searches.

I was prepared for this to be badly flawed like the volume estimates from the old Yahoo tool.

I was surprised by how accurate it was for many of the search terms I used, especially on the exact match setting. Broad match is always a little more hazy, so it was no surprise that my numbers varied, but even then it was not a dramatic difference.

This is valuable data Google is sharing, be sure to make good use of it when planning or expanding new adgroups.

On the other hand, the click estimate tool which guesses at volume and price of clicks received based upon a maximum bid is still badly flawed.

Lots of marketers, both affiliate and otherwise have been encouraged, bribed, cajoled or otherwise convinced to use Google Analytics to track their campaigns. I actually suspect that Google reps are incentivized to get advertisers to use the product.

The main selling point is that it ties into Adwords and uses tracking to determine your cost per lead/sale/whatever back to each keyword with little or no effort on your behalf. If you know which keywords perform good or bad you can then improve your ROI and become more efficient in managing your campaigns. The pitch is perfect for affiliates since they are typically both lazy and like the pricepoint of free.

Google recently bought Doubleclick and there was this huge uproar that they might be in the business of selling rankings via their Performics unit (which they said they would be selling that part of the company), but it turns out performics is also an affiliate marketing network.

Yesterday Google announced that they had renamed the affiliate network to the Google Affiliate Network.

Seems innocuous enough… NOT!

Heres why I think this is a major red flag… If you are an affiliate marketer using Analytics for a product through another network where you are driving traffic via search and Google also has that or a similar offer on their network, then they can simply arbitrage your conversion data and use it to identify the best converting keywords etc.

Say you sell Widgets and Google’s free analytics tool say that the keyword ‘blue widgets’ converts for you at a cost of $6 a sale, yet the widget manufacturer has an affiliate listing through Performics
paying $12 a sale. Your 100% ROI profit is in danger of becoming a $12 profit for Google.  Why should they share that with you? afterall it was their visitor in the first place. Your free analytics tool has now cost you 100% of your profit!

Think Google will not do it? The last time I read their terms and conditions, there is nowhere that it says they cant do this. They will make oral statements saying things like “If we did that we would lose the trust of our advertisers and go out of business”, but they have refused to put that in writing in any way, shape or form. In other words, they can do it.

Something to think about next time you take the easy way out and throw Google Analytics on your pages. There is no such thing as a free lunch.

As I was reading through the SEC posting about the Google Yahoo search deal, (Nicely summarized at TechCrunch) I ran across one tidbit I find very interesting and something Google may not have thought all the way through.

This line in particular: “Yahoo! also has sole discretion to decide on which pages to display ads provided by Google”

Any advertiser with a grain of metrics turns off the Yahoo content network due to the huge volume of non-converting clicks.

Google is also known to allow partners to serve search ads in some really strange places as search not content.

So if Yahoo wanted to hurt Google - My quick read saw nothing that says Google has a buyout right - I would just serve search network ads to the Yahoo content network.

Advertisers would start seeing their Google returns diminish greatly, Google makes it almost impossible to opt-out of specific advertising partners, and most advertisers do not even know that the search network is an option that can be turned off. If in mass, advertisers lowered bids by even 5%, that would take a huge chunk out of Google’s revenue and stock price, almost certainly triggering some articles about how Yahoo seems to be a better ROI for advertisers etc.

Probably will not happen, but what if…

Looking at GOOG stock after hours, it is once again at its all time highs of about $700 per share.

The metrics to me just do not make a ton of sense. It is trading at 54 times earnings and almost 20 times REVENUE, absolutely insane for a company thats growth curve has to slow and sooner rather than later.

Now I ask myself what major advertiser in this country or even the major economic countries is not yet advertising on Google. What company is going to come in and continue to push up CPC’s?

Absent continued quality score ‘adjustments’ how is this company going to drive further significant earning growth? Sure their is a little opportunity over seas that has not yet been exploited, but it is not like they have not yet launched in every major country. Some of its biggest spenders are financial and automotive companies that rely on availability of credit. These companies are in the midst of a huge mess and are probably not trying to figure out ways to raise their search engine exposure. A lot of major corporate spenders after years of too good to be true margins from search are starting to see that the CPC inflation has caught up ROI on search with other advertising mediums is starting to be more equalized. Throw in that search is a finite volume when compared to mass media or direct mail or even banner ads and that compunds the problem.

Google is trying to expand via acquisition, but more of them have turned into economics busts than revenue streams. Things like Grand Central, YouTube, Dodgeball, Orkut, Blogger and Dmarc just dont seem to be driving new revenue growth. Doubleclick is not looking like a sure bet to close. Yahoo and MSN are driving up the price of things like MySpace and Ask syndication deals, AOL is slowly crumbling, and publisher programs from YSM and MSN and Quigo are squeezing once lucrative Adsense margins.

They have failed to execute well on any of their offline initiatives, like radio, TV, print etc. Even so, the margins there are bound to be much much smaller than online revenues and thus the very attractive profit margins will not translate even if they can execute.

Google employees (the truly valuable ones who built the company) seem to be jumping ship on a regular basis leaving the company with a giant sucking sound at the top and middle layers of management and a whole lot of people who seem full of themselves just because they were employee number 7437 and are worth half a million in stock.

I am not saying this stock is not going to 800 or even 1000, much less sane things have happened in the stock market. I am just saying that the visible metrics and ancillary products don’t seem to be going at a pace to sustain the blistering growth that Wall Street expects.

As an ex-derivatives trader I know there are dozens of ways to short the stock while still limiting losses to the upside. The real trick is predicting the quarter when Google misses earning the first time and the air comes racing out of the bubble. I have not yet found the perfect trade, but I am thinking buying a near term out of the money call and combining that with a short of the stock. That way if I am right and it tumbles to $300-$400 range (a sensible valuation IMO) then I make out, but if it takes off or even stays relatively neutral, I am not risking significant amounts of money.

The actual trade will probably be significantly more complex like short a just out of the money call, then use that credit to buy 2 out of the money calls 50 or so points higher for even, plus sell the stock. LIke I said, I dont yet have the trade, but I am starting to look…