Leave the math to us: Advertisers increase profits with Conversion Optimizer

A patent?! He's a witch! BURN HIM!

Not so odd, really. Building the whole loop requires a fair amount of integration and trust between the search engine and the advertiser, which is often easier said than done.

Didn't Google have a CPA beta last year for AdSense? It's interesting that they're coming up with a new product there now.

So...does this mean Google is infringing your patent?

I started using it in September 2007, which was probably within a week or two of it launching. The major visible improvement since is that the system needs conversion data prior to you being able to apply CO. Back when it launched that was 300 conversions in the 30 days prior to hitting the switch, which limited its utility to small businesses. Over the years that number went down -- it was 200 for a while, and now it is 15.

They're just trying to raise awareness of the Conversion Optimiser tool. Surprisingly, there are quite a few small to medium sized advertisers who don't know about it even though they are perfect fits for the product.

In general, due to quality score and various keyword quality concerns, I've found many advertisers are terrified to change their bread-and-butter campaigns for fear something will go awry and they'll be penalized somehow. Makes sense really. Shame that Google can't do a better job helping people over this fear.

Wouldn't it be a simple optimization? Google isn't learning that you don't ship internationally, it's just learning that people from other countries don't convert well for you. It's probably tracking all sorts of metrics on the users, and constantly trying to figure out what profiles work best for you. They don't have to know or care why.

The key thing to understand is that Conversion Optimizer is just a user-friendly wrapper around cost per click bidding. It will look to you like you're paying cost per conversion, but you're not, you're paying cost per click.

So, if you start "shaving" conversions (failing to report them), here is what happens:

1) I tell Google I am willing to pay 25 cents per conversion. My website converts 25% of clicks, which for the sake of easy math we'll say is constant. (Conversion Optimizer is a good idea because it is not constant, in particular, because it tends to be different for every source of clicks in ways which are very time-intensive to track yourself.)

2) After Google's system has figured out the above two bits of information, it will figure out "OK, he can pay about 6.25 cents per click. In general, I should bid that much on his behalf in the auction -- avoiding clicks priced at 8 cents, and 'backing up the truck' on clicks priced at 4 cents.")

3) Then you start shaving conversions, so that while your site continues to convert at 25%, you only report a conversion rate of 20%. Google figures "Wow, sucks to be him, he can only afford clicks priced at 5 cents now and still make his 25 cent per conversion desired price. OK, I'll stop bidding on clicks between 5 and 6.25 cents, and continue bidding on clicks priced below 5 cents."

Thus, lying to Google doesn't particularly hurt them, it only hurts you. This is in sharp contrast to real cost per conversion (cost per action = CPA) advertising like affiliate advertising, where you pay for every conversion you report, so shaving conversions means you get money from customers but get to keep it for yourself.