One of the great things about Google’s Adwords program is how its auction based pricing system automatically sets the appropriate pricing according to both the keyword itself, and the market the campaign is targeting. The system is what makes a keyword like bikini a more expensive cost per click in Miami than it is in Anchorage, and mesothelioma a more expensive keyword than pizza. This is the sort of common-sense approach Google is famous for, and part of what makes them so great.
Google’s recent “Place Tags” rollout seems to fly against pretty much everything they must have learned from AdWords – a tag costs $25, no matter where the market is, what the keyword is, how many impressions there are, and how many clicks there are. Should a place tag for a listing that ranks one the first page for Plastic Surgeon in Beverly Hills really cost as much as Babysitter in Knoxville, TN? I imagine the $25/months gets eaten up even if Doc Hollywood only gets one new patient out of his listing, but how many babysitting jobs does little Sally need to go on before that $25 becomes a valid investment – one that repeats month after month? If Google is serious about their new local-weighted SERPs layout, then it’s a question that takes on a greater importance.
Google must know that their flat price per tag policy is flawed – what are they planning? Pricing based on industry? Location? A per-click model?