tag:blogger.com,1999:blog-6569681.post7273748084334168999..comments2024-03-29T05:14:10.903-07:00Comments on Geeking with Greg: Hal Varian on advertising auctionsGreg Lindenhttp://www.blogger.com/profile/09216403000599463072noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-6569681.post-84884952102741005612008-06-22T12:04:00.000-07:002008-06-22T12:04:00.000-07:00The click has value, so CTR is part of the equatio...The click has value, so CTR is part of the equation. But if an annoying ad reduces future clicks, that has negative value. So it could be that these random other factors are attempting to account for expected change in clicks, not only the immediate click, but also predicted negative (or positive) effects from future clicks.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6569681.post-81386630038634639092008-06-15T15:24:00.000-07:002008-06-15T15:24:00.000-07:00As an AdWords practitioner, this is not news at al...As an AdWords practitioner, this is not news at all. Further, over time, quality essentially boils down to CTR.<BR/><BR/>What may be more interesting is the notion of efficiency horizon. In a single auction, money might indeed be left on the table. But, what leads to better results in the system as a whole and over time? That question is probably impossible to solve analytically but seems the more important one for Google.<BR/><BR/>One thing to noe, the idiosyncracies in Google's quality ratings are one of the biggest barriers to novice advertisers, leading to questions like the following: Why doesn't Google consider me relevant for what I sell on my site?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6569681.post-34373421411404916302008-06-14T17:56:00.000-07:002008-06-14T17:56:00.000-07:00Bid == Value of the ad to GoogleScore == Value of ...Bid == Value of the ad to Google<BR/>Score == Value of the ad to the user<BR/><BR/>Google wants to show ads that<BR/>maximize revenue while also maximizing<BR/>long-term benefit to the user because<BR/>happy users are more frequent users<BR/>and evangelizers.<BR/><BR/>CTR is a simple score but can be<BR/>gamed (e.g., an ad that screams<BR/>"Free iPod!"). Ideally, Google<BR/>would like to somehow calculate<BR/>the true benefit and relevance<BR/>of an advertiser's product to<BR/>the user, e.g., by looking at<BR/>the advertiser's website, reputation, the quality of the particular<BR/>product being advertised, its<BR/>reviews, the relevance of that<BR/>product to the user, the conversion<BR/>rate of the ad etc etc. So the<BR/>score is a black box that provides<BR/>an objective measure of how much<BR/>real value an advertiser/product<BR/>provide a user. Determining this<BR/>score in all its glory is probably<BR/>going to require a lot of invasive<BR/>looking profiling.<BR/><BR/>BTW, the bid itself is not that<BR/>simple either, since advertisers<BR/>might lie about their bids just<BR/>to screw with competitors while<BR/>staying within their budgets (i.e.,<BR/>not making it a losing proposition).<BR/>So it's possible the bid itself<BR/>might evolve as Google figures out<BR/>a different measure of how much<BR/>value an advertiser provides to<BR/>Google, in the context of the<BR/>competition with other advertisers.Anonymousnoreply@blogger.com