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What Google's Preferred AdWords API Pricing Change Means For Enterprise Search Marketers

Back in late April, Google announced that it was changing the way AdWords would work for agencies and application providers managing paid search via the AdWords API. At the start of July, the changes were rolled out. A significant part of Google’s new approach was the introduction of preferred AdWords API pricing. This change means that agencies and application vendors that obtain preferred AdWords API pricing status will now earn free API credits. Google provides users with 250 API units for every $1 of spend managed via an API token. With API credits many agencies and tool vendors now have little or no cost for accessing data and making changes at the search engine.

This seemingly simple change from Google levels the playing field between in-house and externally developed search engine marketing tool providers. Previously, many marketers chose to build tools internally, in part to avoid API charges. Now, for tool vendors that meet Google’s required minimum functionality, APIs are no longer an additional cost for users. Previously, on-boarding with a paid search application could be costly because it required accessing an entire account via the API. For marketers with millions of keywords, thousands of campaigns and groups and hundreds of accounts this cost was often significant. The elimination of API fees will not only decrease the cost of adopting a new tool, but will also expand the functionality available to users without an API overhead. If you are already using or considering building an in-house paid search management tool, it may be worthwhile to reconsider the value that a third-party vendor can provide.

Google said they “hope preferred AdWords API pricing will encourage agencies and developers to experiment with new strategies, expand the functionality of their tools, and build more comprehensive client campaigns without worrying about increased costs.” To maintain preferred pricing, application vendors must continue to meet Google standards by expanding functionality to incorporate new AdWords features like placement management or modified broad match. The comprehensiveness of the features required by vendors contrasts with many internally built tools that are often slow to pick up new functionality.

If you are already reaping the benefits of preferred API pricing from your existing vendor, it’s time to figure out if you can increase the profitability of your paid search program by changing old practices that focused on minimizing API fees. Here are a few things to think about now that the cost-structure has changed.

Are you bidding frequently enough?

Changing bids through the AdWords API without the preferred pricing program was likely costing you a small percentage of spend. Many marketers and solution vendors chose to minimize this charge by calculating bids less frequently, or making changes only when the change in bid price exceeded a certain amount. For example, the bidding system might calculate a new bid, but it might not push the change until the new bid was two cents higher or lower than the current bid. Now that API fees are no longer an issue, marketers have the opportunity to make more frequent and more precise adjustments to bid prices. In the new world order, calculating and trafficking bids daily should be the norm. More importantly, advertisers should be sure to calculate adjustments to bids to account for day of week fluctuations in conversion rates. This allows you to capitalize on user behavior such as increased shopping activity on weekdays and decreased activity on weekends.

Consider automated keyword expansion

Marketers have historically been hesitant to embrace approaches to keyword expansion that rely on software automation. The objections are partially due to concerns about quality, and partially due to concerns about value. It doesn’t make sense to run up a hefty bill for API and click charges if you are simply adding keywords that may never convert. Now that adding keywords to your campaign through a search marketing tool is free of API charges, marketers should consider experimenting with automated keyword expansion. Best practices dictate that you start by examining user queries that convert. Adding these terms as phrase or exact matches to existing groups can help to refine your match types, increasing click-through rates and lowering cost-per-click. Conversely you can test adding original queries as negative keywords in cases where they have a high number of clicks but no conversions.

Use your paid search solution for all keywords

Think about how you are using paid search software today. Some marketers use third party tools only for managing part of their marketing program. The reason? Cost avoidance. For keyword sets that don’t require frequent bid updates or campaign changes, the cost of the solution plus API fees may have outweighed the benefit of using a tool. Because API fees are no longer a factor in cost, it’s worthwhile to reconsider this cost benefit tradeoff. Linking-in all of your campaigns and keywords into a search engine marketing tool will likely help you better understand traffic globally. In addition, many bidding solutions may be able to provide financial lift, even for less volatile campaigns.

Opinions expressed in this article are those of the guest author and not necessarily Search Engine Land. Staff authors are listed here.

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