Google is making changes to AdWords, the core product that fuels its search business, that could help it make mobile clicks into a bigger cash cow.
An unassuming name, "enhanced campaigns," actually a big change in the way search advertisers set up their campaigns. Instead of needing to create distinct campaigns to target users according to the device they use, advertisers can now do this within a single campaign using bid adjustments. That means it will be easier for advertisers to spread their bids to mobile, which is crucial as users drop their PCs in favor of tablets and mobile phones.Advertisers will also be able to bid on keywords based on the time of day and location the search is coming from. For example: a breakfast restaurant could bid 20% less on people searching for "coffee" or "breakfast" after 11 a.m., and 25% more for someone in a half-mile radius. It could also bid more for people searching on a smartphone, since those users are more likely to be in the neighborhood looking for a place to eat right away.
Google's VP-product management Nick Fox says that the intent of the change is to give marketers more dexterity and better measurement with their campaigns, but also to unlock the value of mobile inventory.
Mr. Fox maintains that advertisers have been asking for a way to simplify their AdWords presence, noting that the largest marketers may have hundreds of thousands of individual campaigns set up, "pivoted around every dimension."
"We think there's a huge amount of value to mobile that's not being fully realized today, so that's why we're doing this," he said.
As search moves to mobile devices, moving advertisers there is a key priority for Google. Since mobile searches have generated less revenue, Google's average cost-per-click has been falling, though the decline appears to be slowing. The gap in pricing also appears to be shrinking, with Adobe reporting that the difference in cost-per-click between desktop and tablet devices for its clients was 15% in Q4, down from 30% in Q3.
Daina Middleton, global CEO of the search agency Performics, thinks making it easier will help Google lift mobile ad prices. "Certainly making mobile an automatic component in the campaign set-up has to help drive that adoption faster," she said.
The new tool probably won't change the game for the biggest brands, which already have complex and well-optimized search campaigns, according to Chris Copeland, CEO of GroupM Next, a unit of WPP. But it could raise their prices. Since more small and mid-sized advertisers are likely to start buying mobile inventory now that the process is streamlined, it could drive up bidding on mobile keywords, meaning big advertisers pay more, too.
"When you over-simplify systems, you encourage more participation from marketers of all sizes, and the problem is that those marketers don't have the resources to necessarily understand what a sound bid price is," he said. "And suddenly for those in the systems every day, there's a lot of conflict and price inflation."
Mr. Copeland also noted that there are interesting future applications of "bid adjustments," limited to increasing or decreasing the bid by a given percentage for a device type, time of day and location at present. If Google made logged-in user data from Google+ available on an anonymized basis, it could potentially allow advertisers to drill down their AdWords bids based on age, for example.
"I think they will add more levers over time," he said.
Another core change to the AdWords product, also linked to mobile, is letting advertisers set up a single campaign to show contextually relevant ad creative based on the device the search is conducted on. For example, a retailer will now be able to show a click-to-call ad to people searching on their phone and an ad linking to their e-commerce site to someone searching on a PC. And calls and app downloads -- two essentially mobile metrics -- will added to AdWords reports alongside traditional entries like clicks and impressions.
Google intends to roll out "enhanced campaigns" this month, and all new campaigns will be enhanced by default, Mr. Fox said. In June, all campaigns that haven't flipped the switch will be automatically upgraded.
EMarketer projects Google has a 93.3% share of the $1.99 billion U.S. mobile search ad market – a $1.86 billion haul. Spending on mobile search ads domestically is expected to jump 55% to $3.6 billion next year, with Google holding down a 92.4% share.