AdWords Bug Costing Google Millions?

In case you’ve had your head under a rock for the past couple of days, Google screwed the pooch on their release of the Quality Score (QS) data. Along with releasing the QS, they also sent the minimum bid per click through the roof for thousands, if not millions of words…. to the tune of $10.00 per click! Google was “aware of the problem” roughly 36 hours ago and yet, still no fix. Interestingly enough, they’ve also not rolled back the changes.

Naturally this has led to quite a bit of discussion of what the hell is actually going on. Obviously the release of QS data should not have affected the minimum bids at all. So, despite Google’s assurances that their planned changes to the QS algo would not roll out until late in this coming week, it’s obvious that Google coordinated the QS update to coincide with the QS data release. At best, it was a critical mistake, at worst though, Google lied. Given that a Google representative admitted that they were making the QS data available in hopes of warding off any uproar when they did make changes to the QS algo, it wouldn’t be unreasonable to assume they were hoping advertisers and bloggers alike would focus on the new data at their fingertips rather than the algo changes. However, increasing the minimum bids to $10.00 a pop probably wasn’t the best way to fly under the radar. People tend to notice a 1000% increase in their projected costs.

So, as Google tries to figure out what went wrong, there seems to be some confusion in the blogosphere as to how advertisers were actually affected. Allow me to preface my statements by saying the only information I have available is my own experience. However, I feel that my experiences as an AdWords user are fairly typical. OK, so what happened to Adwords advertisers? Our account saw a large number of terms shoot up to that nice $10 platform. However, we were NOT instantly charged $10 per click and this seems to be where the misunderstanding is. As I said, we were not automatically charged that price, those words simply became inactive, and we were required to up our bid to that level if we wanted to re-activate the words. We obviously did not, and our AdWords spending dropped by 75%

With that in mind, and again, assuming that my experience is fairly typical, Google would actually be LOSING money, and quite a lot of it. I simply can’t see many (if any) advertisers upping their bids that high. So, rather than sending us to the checkout lane as Michael Gray suggests, they are actually telling us that if we’re not prepared to lay down thousands of dollars a day for those clicks, they won’t sell them to us.

Even if my experience is more extreme than most, Google would still be losing MILLIONS of dollars every day this “bug” goes unfixed. AND, even if Google WERE profiting from this bug, it would be incredibly foolish of them to allow it to continue to happen. Think of the number of lawsuits that would instantly spring up if advertisers were losing money due to such a well publicized bug. Now, I still don’t understand why they won’t rollback the changes and debug the issue on some multicolored test server (my guess is they simply can’t for whatever reason) but the fact that they haven’t rolled them back hardly suggests they are making more money off this. Google definitely screwed up but in this case, I don’t think it’s due to greed.

As always, if you have an opinion or a different experience to contribute, please leave a comment and join in the discussion.