Robert Hof had a very interesting article in Business Week that took a look at the numbers over at Google; but didn’t account for the why. The statement that clicks on paid ads have flatlined did not mention the changes in display URL policy which has had a dramatic impact across the paid-search marketing industry. It is undeniable that Google is the leader in search marketing. They have obtained this position by providing the most consistently relevant results to their customers, and they have the same dedication when it comes to sponsored results. This dedication played out most recently with the crackdown on display URLs. Now, for those who don’t run paid search ads, let me explain.
The display URL is not necessarily the URL which you land on when clicking a paid search advertisement. Instead of being sent to www.carmax.com when clicking on the above ad, you are actually sent to a landing page that can look something like this: http://www.carmax.com/dyn/home.aspx?adcode=GOOAW100704EF& Google’s policy has always been that the display URL and the destination URL needed to be part of the same domain, but many advertisers were not adhering to this policy. Let me give an example: ReachLocal has been a darling of the search marketing industry for the past year. They have seen exponential growth and have produced fantastic results for many clients; but, their model requires ownership of the landing pages they send customers to through a domain they own and not the client’s web site. Take for example a client, baubbles.com, advertising with ReachLocal. ReachLocal creates the ad with a display URL of baubbles.com, but they send them to a landing page at baubbles.reachlocal.com. Now, most people wouldn’t even notice the difference: the page looks exactly like a page from the baubbles.com web site; but, it isn’t the baubbles.com web site. Google put its foot down and said it will no longer allow the display URL to be different than the destination URL. Instead of advertisers being able to create a landing page and host it on their own domain, they now have to access a client’s web site. This changes the business model for many online advertisers. There are significant costs involved in having to manage advertising directly through a client’s web site as opposed to a domain managed by the advertiser. I see a direct correlation between the flatlining of clicks on ads and a policy change. Hundreds of companies just like ReachLocal will be scrambling to figure out how to provide quality service at a reasonable price point while managing client’s sites which are coded in PHP, ASP, .NET, Ruby, HTML and whatever other language someone is trying out. I admire the foresight of Google to put their customers above the bottom line. It is not easy to turn down advertising dollars, but Google has done just that to provide a more secure and user-friendly experience for its customers.