Google recently released a new feature for their AdWords advertising – demographic bidding. This new feature allows advertisers to target their ads to users of a particular age group, by gender, or by combinations of these groups. The feature can be used in conjunction with cost-per-click (CPC: the highest amount you are willing to pay for a click on your ad) and cost-per-impression (CPM: the highest amount that you’re willing to pay for each 1000 impressions on your placement-targeted ad) bidding.

With demographic bidding, if an advertiser knows primarily females in the age group of 18 to 25 like wear pink Nike shoes, the advertisers can target their ads directly to that group by restricting their ads from certain users . Demographic bidding gives the advertiser more control over the demographic group that sees their ad by letting the advertiser modify their bid and/or restrict their ad’s visibility based on their audience.

Bidding More For a Certain Demographic Group

To help their ad be seen by a particular demographic group, advertisers can boost their bid whenever their ad is eligible to be shown to a member of that particular group. This is done with the “Bid + % system.

Google notes, “By entering a percentage of up to 500%, you’ll raise your bid by that amount for members of the group you choose. For instance: If your existing bid for a placement or keyword is $1.00 CPM, and you set your demographic bid multiplier for women to +25%, then your CPM bid for users identified as women would be $1.25. ($1.00 + $0.25 = $1.25.) In this way, you’ll be making a more competitive bid for the potential customers that mean the most to you.”

As discussed in class, AdWords utilizes a variant of the second-price auction.

What Demographic Bidding Means

Google will be able to monetize contextual ads on participating sites such as MySpace and Friendster. In addition, it steers Google in the direction of online profiling and lessens their dependence on contextual and search targeting. Also, recently acquired DoubleClick will help provide online behavioral information to Google advertisers.