Google Launches New Pay Per Click Service

• Feb. 20, 2002

In response to a lack of enthusiasm for its current cost-per-impression (CPM) Advertisement services, AdWords, Google has announced the development of AdWords Select. The Select service, which will run in addition to the current AdWords service, will be billed on a pay per click basis, as opposed to pay per impression.

The new ads will be displayed above the current ads from the original AdWords program, with much the same look and feel. A Webmaster with sites currently listed with Google through the existing AdWords service must first cancel this and then sign up for the Select service. Apparently, the two indices will remain separate for the time being.

Cost management for AdWords Select appears to be somewhat innovative. A common problem with bidding for the highest rankings in Overture relates to overbidding: when webmasters pay substantially more per click than their nearest competitors. Google has attempted to solve this problem by automatically lowering the cost per click for a particular keyword listing to one cent more than the closest competitor for that keyword is paying. Another feature of AdWords Select is that no one site can permanently hold the top position for any keyword, since click-through rates as well as Cost-Per-Click determine where an ad is shown. The most relevant ads will (theoretically) rise to the top.

According to Google, minimum Costs-Per-Click have been set for AdWords Select keywords based on how well those keywords sold in the original AdWords program. Google states: "AdWords Select advertisers will not be able to purchase keywords unless their CPC rate is comparable to or higher than the amount being paid for those same keywords through the original AdWords program." Whether webmasters will bother to make the jump to AdWords Select remains to be seen, although the success of Overture and other such services might mean that Google is on the right track.

Related Links:
https://adwords.google.com/select/main?cmd=Login