Google Adwords

Google adwords is a phenomena. It's made life safe for the banner by taking all the direct marketing people (who spam your mail box and count reponse rates) and giving them something they can count, leaving the "creative" types free to ignore actual customer responses entirely.

Exactly how Google adwords works is opaque, as is much of Google. This Cringely article describes an experiment where a small eRetailer created a second site that mirrored his first one, and then used this second site to see what impact different pay rates for adwords has. Adwords work by the retailer paying for placement -- the more he pays, the higher the placement is.

On the original site, the eRetailer paid 10cents a word and got 15,000 clickthroughs. On his mirror site he paid 100cents a word and got more clickthroughs, but Cringely does not say how many more. He then dropped his price on the mirror site and got 1,200 clickthroughs.

Cringely has all sorts of conspiracy theories for why this happens, but I'm guessing that Google Adwords tries to reduce how much the system can be gamed by trying to weed out non-serious retailers. After all, if someone clicks through an adword and then gets ripped-off, they may not click through an adword again. A new website (which is what this mirror was) that changes how much it pays dramatically in a short period of time is certainly less reliable than an old website that's been paying the same for months. It does not seem unreasonable for Google to degrade the ranking such a company would get. (via /.)