Google Reportedly Plans Ad Algorithm Change

Feb.25.08 | About: Alphabet Inc. (GOOG)

RBC Capital’s Jordan Rohan Monday morning says Google (NASDAQ:GOOG) is planning an algorithm change for some advertisers effective February 28. He says the change “could prove to be a positive catalyst” for Q1 and Q2 results.

Rohan says details on the change are not complete, by that it appears the company is adding something it calls “Automatic Matching.” Rohan says that according to an email sent to advertisers, “Automatic Matching extends an advertiser’s campaign reach by using surplus budget to serve ads on relevant search queries that are not already triggered by the advertiser’s keyword list.”

Rohan says Google is basically adding keywords to certain campaigns “to increase the total number of clicks that an advertiser generates, tapping unspent budget and increasing overall spend.” He notes that it is too early to estimate the impact of the change, but that it could be a positive catalyst. He notes that previous algorithm changes had “significant positive impact to results.”

Meanwhile, Rohan says preliminary checks on the company’s first quarter are mixed. “The early read is that Jan tracked slightly below expectations as the volume drop-off post-holidays continued longer than normal, but that trends have picked up in February,” he write.

Google Monday morning is down $3.32, or 0.7%, at $504.34.