Google Adds a Few Dollars to AdWords

Some advertisers who buy AdWords with Google are reporting significant increases in their cost of business.

Advertisers in several online forums have been reporting increases in the cost to buy AdWords over the last few days. One user reported his cost-per-click price rose 400 percent, while another reported an overnight increase of 2,000 percent.

“I’ve had keyword bids go from 30 cents to $10,” read one post.

Google announced last week in a blog post that it was making changes to the way it judges the quality of AdWords landing pages. Landing pages are the pages on an advertiser’s Web site that a user lands on when clicking through an ad. In that announcement, Google warned that advertisers who are providing a poor user experience on their landing pages may see an increase in their minimum bids.

“We realize that some minimum bids may be too high to be cost-effective,” the post read in part. “Indeed, these high minimum bids are our way of motivating advertisers to either improve their landing pages or to simply stop using AdWords for those pages.”

According to a recent report from Perfomics, a unit of DoubleClick, the average price of purchasing keywords decreased in the first quarter of 2006. The average price fell to around $30 in the first quarter, from the yearly high of $59 last December. Year-over-year, cost-per-keyword has remained relatively flat.

A few users in search forums have reported that their AdWords expense has decreased since Google’s change to the AdWords algorithms.

Some advertisers, though, argue that Google should not be allowed to enforce landing page quality. Web site owners, they say, are the best judge of whether their landing pages are useful for would-be consumers.

“They need to understand that there are literally dozens of different types of sites,” read one post. “By that I mean, dozens of sites have many different purposes and to clump them all into one and do a huge [algorithm] sweep is asinine.”