An “API” is an Application Programming Interface that allows you to hook into another computer system to exchange information with it. For example, Google and Yahoo both have search API’s that allow you to extract search data from their systems for display in your own applications or web pages, formatted however you want. This data is generally in XML format and exchanged via a protocol called SOAP (Simple Object Access Protocol). If you’re not going to be doing any programming, you really don’t need to worry about this stuff. But the reason I bring it up is just to give a little bit of technical background for the remainder of our discussion, which is about using pay-per-click applications that use the search engine API’s to get data.
In our opinion, it only makes sense for the search engines to provide open access to their API’s and to provide plenty of information for advertisers to run effective ad campaigns. But the trend seems to be going in reverse.
Last year, Google announced that it would begin charging a fee of $.25 per 1,000 operations. This doesn’t instinctively feel like a lot, but it is. Performing a single action in a pay-per-click management program generally involves several operations. And these programs, by their very nature, are intended to be used to make several or even dozens of bid changes for ads every day, for every keyword or keyword group associated with each ad. So this adds up to potentially many, many thousands of actions every day, adding substantial costs on top of the expense of paying for the ads in the first place.
A backlash has already started, as some companies are moving toward using cheap labor to manage their ads, rather than this expensive technology. Given that the easier it is for advertisers to manage their campaigns, the more money Google will make, we don’t see how this benefits anyone.
Yahoo, with the release of its new ad management system, has also made a change to its API. Though Yahoo is not charging like Google, it has placed a much greater bandwidth restriction on the data returned from its API. What this means is that bid management programs will have to make fewer changes to bids to stay within limits. Again…why would Yahoo make it more difficult for advertisers to use manage their accounts? We know that constantly pinging search engine servers to make changes to sponsored search bids are a drain on their servers, but these companies make billions of dollars a year, and their profit should easily pay for enough servers to handle it.
As for MSN, except for invited parties, they have not yet released their API for general consumption (we wish they would get on with it), but we have a feeling that Microsoft will be much more open with its API, at least initially, since it is still playing catchup in the search arena.
The net effect of these changes to API’s is that it just won’t be as cost effective to use bid management software as it once was. With Google, you will be paying an expensive tax on top of your bids, and with Yahoo, you will have much less control. At Work Media, we are still experimenting with different ways to manage campaigns. We actually still do most of our campaign management manually and will probably continue to do so. Especially now that the search engines are making it so difficult to use their API’s.
If you need help managing your sponsored search marketing campaigns, please call us at 888-299-4837 or email info@workmedia.net.