Google 'Smart Pain' - How Google changes it's algorithm
Google 'Smart Pain' is one of the closely guarded secrets that Google keeps in regards to how it's algorithm works in regards to PPC. Google's Smart Pain is an element of the algorithm that Google can control that sets a multiplier for CPC's when looking at different networks or devices that PPC ad's are delivered through Google.
The three elements in question are: Google Search, Google Content Network and Google Mobile. What Google's Smart Pain does is set a factor by which CPC's are set for each of these different elements.
The best way to explain 'Smart Pain' is by using an example...if you take Google Search as 10 out of 10, then Google can use the Smart Pain part of its algorithm to adjust CPC prices for other elements. As a result Google's Content Network CPC's are set at 7/10 and Google Mobile is 6/10.
Google Smart Pain CPC comparision
Google Search - 10/10 example CPC £1.00
Google Content Network - 7/10 CPC would be £0.70
Google Mobile - 6/10 CPC would be £0.60
By using Smart Pain, Google is able to set CPC's for advertisers in order to get the best return for them when looking at the different methods of delivering PPC ad's.
We have also recently learnt that as Google is pushing it's Mobile offering in particular at the moment (after all, this is the year of mobile...as was last year and the year before that!) and as a result Google Mobile is being reduced from 6/10 to 4/10 when it comes to setting CPC's for Mobile. Why is Google doing this? Google wants more advertiser to promote Mobile and by offering cheaper CPC's then advertisers should see a better ROI and recent surveys show that the traffic volumes for Mobile (on smartphones at least) is finally on the rise. Google is predicting that traffic on Mobile devices will overtake Desktop searches within the next 4 years...we will wait and see.
What does this mean?
1. Google does have the ability to set CPC's.
2. Mobile is looking like the way to go for advertisers in the second half of 2010, if they want to focus on ROI.
Disclaimer: SearchXplorers cannot prove the existence of Google Smart Pain...but we have it on good authority that it does exist and we have seen that it does make sense when you look at the CPC's of your Search, Content and Mobile PPC campaigns.
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