Explaining Google's AdWords enhancements

Google's first step to help customers manage ad campaigns in today's multi-device world has generated a predictable range of responses. So what do the changes really mean?

Google’s announcement that its new “enhanced campaigns” upgrade to AdWords will soon eliminate (or at least limit) the capability of its customers to specify explicitly whether they want to include mobile devices or desktops only in their campaigns is generating a predictable range of responses, from anger over loss of control to praise over simplification and improved access to mobile opportunities. 

Adobe argues that Google’s changes may result in lower ROI for advertisers as Google seeks to raise its revenue per search on mobile devices. There are valid points on both sides, but the simplification argument bears repeating: the complexity of having to manage unique campaigns for every device-location combination is clearly an impediment for digital marketers, and Google is removing much of this burden with smarter context-based automated adjustments.

A central detail here is Google’s treatment of tablets. “Enhanced campaigns” (scheduled to roll out in mid-2013) will no longer distinguish between tablet and desktop/notebook searches. From an ad format viewpoint, this is rather natural since tablets tend not to require resizing of ads, and Google points out that tablet computing is replacing desktop and notebook computer usage in the home, and that they both have a pretty similar mix of search terms and ad performance.

But there’s more to it than that. First, many advertisers have formed an impression that targeting tablets is better for their brands. More on this in a moment. But, second, the thorny issue of whether to count tablets as mobile devices for media measurement purposes just got thornier. If, as a result of Google’s accounting, the universe of mobile devices shrinks from smartphones and tablets to just smartphones while tablets join the PC side of the ledger, the tremendous growth rate of mobile advertising might appear to have stalled. This could have major implications for investors and innovators, but don’t be fooled: mobile adoption is still way ahead of marketers, and we can thank Google for encouraging us to think beyond devices to contexts and multichannel relationships.

But back to that tablet branding thing. The great success of PPC advertising has been its appeal to direct marketers, who are squarely focused on the hard economics of ROI. In that world, it doesn’t really matter if click rates are lower on smartphones or higher on tablets; since they only pay for clicks the only things that matter are click-to-conversion ratios and revenue-per-conversion. Knowing these, the value of a click is clear and the device it comes from is hardly relevant.

Brand marketers still tend to disdain this engineering approach to marketing and feel that context and experience matter a lot, even if they’re harder to measure. This is one reason they’ve been wary of smartphones for advertising – the units are so small, the contexts so brief and lean-forward. This was part of the promise of the tablet: a hi res, lean-back experience made for brand discovery and impact. So will Google be able to sell an undifferentiated AdWords channel to brands? …or will Google’s Invite Media solution remain a better answer for them? Either way it’s nice to have choices.

Andrew Frank covers marketing and advertising technology and business trends as a Research Vice President with Gartner's Media Research team.

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