Just follow a typical surfer as he enters your site.

Google Adwords – clicks and cost per conversion recorded

Google Analytics – detailed click information recorded

Google Website Optimizer – page elements recorded

Google Checkout – product or service sales price recorded.

Google now has your:

* Avg bid price $.40
* Avg blue widget cost per conversion $80.00
* Avg sale price $120.00
* YOUR PROFIT MARGIN $40.00

Google now understands your ad budget, your cost per acquisition, product or service sale price, and detailed customer information.

So with you and thousands of your competitors providing this free market data from advertising to sale, the loop is now closed, allowing Google to make arbitrary judgements on bid prices based upon the FREE and PRIVATE information you have provided.

One can argue that the market will determine Adwords bid prices however we already know that with Google's landing page quality update this is simply not true. Bid prices escalated dramatically for advertisers that were deemed unsatisfactory by Google's standards.

I would be very wary about providing so much private internal marketing data to a company that is charging you for advertising. As marketers we should know that providing your most intimate details for that "t-shirt" is simply not good business.

Thanks for this timely post. For Google's nascent testing product, "free" and "multivariate" should certainly draw some interest. I look forward to seeing how things play out over the next year, building public awareness for testing as a graspable, actionable method that should be a staple of every web marketer's toolbox.

As I think one of our competitors pointed out in a related blog post, this is also a great vote of confidence for products like SiteSpect that give web marketers the ability to test new ideas, learn what works, and avoid what doesn't.

For those interested in using GWO when it becomes publicly available, here are a few questions that marketers should consider for determining suitability:

do you need to test and optimize more than one page at a time, or factors that span pages? GWO is single-page testing only.
do you have the time and resources to change your site each time you wish to test a new area? GWO is javascript/tag based, and requires web site modifications for each new area that you wish to test.
do you need to test/vary content that's dynamically generated? Like other javascript-based testing products, GWO cannot test variations of personalized and/or dynamic content.
do you need to optimize for more than one user objective? GWO is single-metric only.

Finally, it was a pleasure meeting you at the eMetrics show… hope to see you in SF next year, if not sooner!

Cheers,
Eric