The rate card that rates you

Not many companies are as interesting as Google. From their basic technology to how they make money, they repeatedly make you think "Okay, so that means..." and a bunch of new implications come spilling out.

Today's NYT outlines the workings of Google's "ad quality" team. Because the creative and placement variables of Google ads are relatively few and are controlled by Google, they can experiment with them and directly measure the results. This helps them determine how to price ads which makes them more money.

Even more interesting, one of the variables they incorporate into their pricing and placement model is the quality of the consumer's experience after they click on the ad:

Over time, the company also looked beyond click-through rates to rank ads. Google now takes into account the “landing page” that the ad links to, and, for example, gives low grades to pages whose sole purpose is to show more ads. Soon, the loading speed of a landing page will also be considered.

These factors contribute to an ad’s “quality score.” The higher that score, the less the advertiser has to bid to secure top billing. For example, an advertiser who offers to pay $1 per click to attract those searching for “vacation rentals in Colorado” may receive more prominent placement than another who bids $1.50 for the same query but has a lower quality score. An advertiser with a very low quality score may have to bid so much for placement as to make it uneconomical.

Quality scores work as an incentive to advertisers to improve their ads, which benefits users and, in turn, benefits Google.

Yikes! Better service (and can better products be far behind?) leading to lower ad rates? Some advertisers are confused and angry ("many advertisers complain that the company was, in essence, deciding who can and cannot advertise on its system") but Google seems to believe that the overall health/value of their ad system is increased when consumers believe that Google ads represent relevant and high-quality suggestions.

Most media discriminate among advertisers in some way. You're not going to see a Hooters ad in Vanity Fair anytime soon.  But I've never heard of a media company digging so deeply into the post-ad consumer experience and using it to directly affect rates. I can feel the possible implications radiating outwards...