
Leave the math to us: Advertisers increase profits with Conversion Optimizer - Anon84
http://googleblog.blogspot.com/2009/08/leave-math-to-us-advertisers-increase.html
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pg
Odd to think it's taken till now for someone to build the whole loop.

[http://patft.uspto.gov/netacgi/nph-
Parser?Sect1=PTO1&Sec...](http://patft.uspto.gov/netacgi/nph-
Parser?Sect1=PTO1&Sect2=HITOFF&d=PALL&p=1&u=%2Fnetahtml%2FPTO%2Fsrchnum.htm&r=1&f=G&l=50&s1=6,631,372.PN.&OS=PN/6,631,372&RS=PN/6,631,372)

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jimbokun
So...does this mean Google is infringing your patent?

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pg
You mean Yahoo's patent. I think it may have played some kind of role in some
negotiation long ago between Google and Yahoo, but I doubt it has any effect
now.

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dminor
Tried this for about a month and ended up with a drop in conversions and
slightly higher cost/conversion, so it doesn't work for everyone.

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axod
The adwords conversion optimizer has been around for at least a year, maybe 2
or 3. So I'm not quite sure what's changed now. I tried it with really good
results on a website where I wanted to only pay a specific price for each new
user.

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patio11
I started using it in September 2007, which was probably within a week or two
of it launching. The major visible improvement since is that the system needs
conversion data prior to you being able to apply CO. Back when it launched
that was 300 conversions in the 30 days prior to hitting the switch, which
limited its utility to small businesses. Over the years that number went down
-- it was 200 for a while, and now it is 15.

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URSpider94
I bet many marketing departments would be happy to switch to CPC, even if it
increases costs, because they are paying for results, not traffic.

From Google's perspective, this also gets them out of the business of auditing
clicks. Giving them insight into conversions at the customer side also gives
them another metric to evaluate the quality of content pages where they are
placing ads, and potentially for refining their search algorithm.

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brown9-2
_If you don't ship internationally, Conversion Optimizer will learn that
clicks from international users don't convert and will eliminate traffic from
outside the United States._

I'd be curious to know how they would determine something like this
(Googlebot-scraping the html of order pages and checking presence of form
data?) - or if it's just marketing hyperbole.

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gcanyon
Wouldn't it be a simple optimization? Google isn't learning that you don't
ship internationally, it's just learning that people from other countries
don't convert well for you. It's probably tracking all sorts of metrics on the
users, and constantly trying to figure out what profiles work best for you.
They don't have to know or care why.

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encoderer
There are a lot of CPA Networks out there already and I'm not sure Google
brings anything new into the table with the offering.

It obv works for advertisers wanting CPA and only willing to advertise with
Google, but for the rest, it's just a me-too effort from Mountain View.

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miracle
What happens if you only send 1/3 of the conversions to google?

Do you have to pay a higher conversion price then?

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patio11
The key thing to understand is that Conversion Optimizer is just a user-
friendly wrapper around cost per click bidding. It will look to you like
you're paying cost per conversion, but you're not, you're paying cost per
click.

So, if you start "shaving" conversions (failing to report them), here is what
happens:

1) I tell Google I am willing to pay 25 cents per conversion. My website
converts 25% of clicks, which for the sake of easy math we'll say is constant.
(Conversion Optimizer is a good idea because it is _not_ constant, in
particular, because it tends to be different for every source of clicks in
ways which are very time-intensive to track yourself.)

2) After Google's system has figured out the above two bits of information, it
will figure out "OK, he can pay about 6.25 cents per click. In general, I
should bid that much on his behalf in the auction -- avoiding clicks priced at
8 cents, and 'backing up the truck' on clicks priced at 4 cents.")

3) Then you start shaving conversions, so that while your site continues to
convert at 25%, you only report a conversion rate of 20%. Google figures "Wow,
sucks to be him, he can only afford clicks priced at 5 cents now and still
make his 25 cent per conversion desired price. OK, I'll stop bidding on clicks
between 5 and 6.25 cents, and continue bidding on clicks priced below 5
cents."

Thus, lying to Google doesn't particularly hurt them, it only hurts you. This
is in sharp contrast to real cost per conversion (cost per action = CPA)
advertising like affiliate advertising, where you pay for every conversion you
report, so shaving conversions means you get money from customers but get to
keep it for yourself.

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gcanyon
...hence the easier way to "shave conversions" is to designate a lower
effective CPA. Instead of saying 25 cents and reporting 20% conversion, you
could simply say 20 cents and get the exact same result.

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patio11
Right, you understand this perfectly. With Conversion Optimizer, shaving is a
non-problem: an advertiser who shaves is just doing something they're
permitted to do ("bid less for clicks") via a roundabout way.

This throws people for a major loop because Google encourages people to think
of Conversion Optimizer as CPA bidding and shaving is automatically a problem
for publishers in CPA. In standard CPA, shaving is "not paying for services
which you have already received".

Its sort of a leaky abstraction for an advertiser. Conversion Optimizer is
described as CPA bidding because that is the easiest way to tell an
experienced advertiser what it is. It does, indeed, feel like CPA bidding when
everything is going right. But there is CPC bidding going on underneath it,
and while that detail is abstracted away it can bite you in the hindquarters
if you're not aware of it.

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calambrac
This puts a lot of consultants out of business :/

