The Impact of Google +1 on PPC

By — 07.26.11

http://mashable.com/2012/05/09/google-plus-iphone-update/

Several bloggers have recently written about the connection between Google +1 and PPC (see below for some examples). All of these articles mention Google’s stated policy that the number of +1’s given to ads will not directly affect Quality Score (QS) calculations. As you know, however, click-through rate (CTR) affects QS. We believe that seeing a +1 next to an ad from people you trust in your social circles will dramatically increase CTR and thus indirectly have a big impact on QS.

Having even a single +1 next to an ad on a screen, where every other ad does not, will significantly influence which ad a customer clicks. After all, any endorsement—especially from someone in your social graph—is better than none. According to Google (as quoted in Google+1 for PPC):

  • 90% of consumers online trust recommendations from people they know
  • 71% say reviews from family members or friends influence purchase decisions

Those higher CTRs will increase an ad’s QS. Ahigher QS will increase ad rank. And a higher ad rank means a higher position. Since ads in higher positions also grab the highest share of traffic, you get a double whammy. First, your ad has a higher CTR due to the +1 annotation. Second, you get a CTR boost due to a higher position. This is important because revenue is directly proportional to CTR. A lift in CTR will drive an equal lift in revenue.

It will probably take months before we are able to quantify the impact this will have on campaign performance, but I think it’s inevitable that it will have a sizable impact. We’re already seeing similar “Like’s” on Facebook ads affecting CTR, and retailers are getting savvier about ways to motivate customers to Like their company pages (see Bryan Eisenberg’s blog post, 7 Steps to Increase Facebook Fans). “Liking” improves the relevancy of ads shown to Facebook users, which drives higher CTRs, which ultimately drives more revenue. The same thing will happen with Google +1.

The impact will be slow at first. You can increase the total share of +1 annotated impressions by persuading as many people as possible to +1 an ad. This +1 annotation will then be shared with the social graphs of those who +1 the ad. The extended network of people who see the annotations will have a higher CTR and QS.

It remains to be seen if Google will calculate QS on the fly depending if the ad has a +1 annotation. I suspect that eventually they will. After all, it’s in Google’s best interest to show the higher CTR ads first. They will likely look at your CTR for impressions both with and without the +1 annotation and adjust your QS based on whether a user will trigger an annotated impression.

Providing customers with incentives to click +1 should help boost CTRs somewhat, but in the end, the only sustainable way to get more +1’s and stay ahead of your competition is to focus on retailing basics: sell great products, at the right price, backed by great customer service. This is what transforms transactional customers into active brand advocates who will +1, Like, and in other ways promote your brand.

In fact, I think +1 will incent retailers to focus more on their brand image. Retailers will need to address the question of why a customer would publicly declare his affinity for their brand, and answering that question will reveal how to get more +1’s. Eventually, the number of +1’s a retailer has will provide a viable quantitative measure of brand strength in a world of fuzzy brand metrics.

The race is on to get brand advocates. Are you on your mark?

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2 Responses

  1. [...] half of the equation in determining ad rank, which influences click-through rate (CTR) and revenue as we recently discussed. The other half is the Quality Score (QS) in Google [...]

  2. [...] half of the equation in determining ad rank, which influences click-through rate (CTR) and revenue as we recently discussed. The other half is the Quality Score (QS) in Google [...]

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