I have come to realize that there may be some troubles at Google Adwords. To explain I need to give you some background.

I feel that Google like's Todd as a customer much more than they like me these days. You see, Todd is more of a head chaser and I prefer chasing the tail. Before you let your mind wonder here, this is still a PG site.

There are two main parts of search engine traffic, the head and the tail. The head represents a large number of keyword phrases that get searched most often, the tail represents the many different phrase combinations that don't get typed in as often, but make up a large portion of the search traffic. If you chart search engine traffic it will look something like the image displayed in this image, ironically named "serving, the long tail". Google has charted this as businesses and dollars, you more typically see this chart as phases and search quantity.

Chasing the Search Marketing Head
Todd likes to identify the most trafficked terms and find the right bid price that maximizes his profits. He will often focus on a very small select number of terms that drive significant traffic. He is willing to bid high on these terms because he has identified an arbitrage opportunity where he can make money on the term.

Google loves Todd because Todd is often paying a lot per click and is driving up the click costs on key terms where there is often a lot of competition. Todd isn't loving Google these days, because Google's new ad policy of only showing one ad per url is often pitting Todd against other affiliates and even worse, his merchant partners for displaying ads under the same highly competitive but easy to identify terms.

Chasing the Search Marketing Tail
Google hates me because I often generate keyword lists in the 100,000 to 1,000,000 range and go after every possible combination of phrase. I know that perhaps only 20% of these terms will drive any significant traffic, but in bulk these terms generate a lot of traffic at very low costs due to the lack of competition on these phrases. Google has indicated database problems on their side with accounts with large terms and has made some changes to make this practice more difficult. First the implemented a predictive CPC program that estimates potential traffic and will often put 80-90% of my terms on hold right away and then put 1-2 terms on trial to "test them out". Secondly, they have implemented a policy for new accounts of only allowing 50,000 active keyword terms per account.

You might think that Google"s headline above "Serving the long tail" might indicate they are looking for advertisers like me, but that is not the case at all. They are looking for a lot of small advertisers that want to purchase a few very niche keywords that will work for their business. They see the tail as a large number of advertisers who have yet to come online.

Troubles at Google?
The bottom line from my point of view, is that Google has positioned themselves in a very adversarial way towards affiliate marketers, and this could open the door for competitors to attract this very profitable niche of online advertising. I have already seen my ad spending jump on Overture (Yahoo Search), and am seeing more and more traffic coming from MSN. MSN should adopt very affiliate friendly policies when they run their own keyword advertising systems and steal this business away.

Perhaps Google’s bottom line is better served by getting more and more people to bid on the same key phrase and driving up bid prices on the most highly trafficked terms. It would seem helping these advertisers better mine the tail could be just as profitable.