Rumblings Over AdWords API

There's a minor tiff brewing over Google's pending changes to their AdWords API. The API facilitates creation of tools for interfacing with their popular advertising program and is used primarily by advertising and marketing agencies.

The changes, scheduled to be activated on July 1st, were announced on the AdWords blog. WebProNews gives a good overview of the changes. Focusing more on the controversial aspects is Heise Online:

  • The previously free quota usage system will be replaced with a usage-based fee model (see below)
  • All AdWords applications must implement all of the interfaces that AdWords provides
  • The Terms and Conditions now limit or prohibit applications from storing AdWords data with data of competitors like Yahoo! and MSN, as well as third parties

But, as noted in the AdWords blog, at the same time these changes potentially open the door for other commercial applications:

  • Revised quota allocation system & pricing model: We are changing the quota allocation system and pricing model to create a more flexible and level playing field that encourages efficient coding and application design. Effective July 1, 2006, the current free quota system will be replaced by a usage-based system. Under this new model, AdWords API token holders will be charged a nominal $0.25/1000 quota units consumed. As a result, current developer quota caps will be removed in order to provide a more flexible and scalable system for quota allocation and consumption.
  • Modified terms and conditions: We are modifying our terms and conditions in order to simplify developers’ abilities to commercialize their applications while at the same time ensuring that advertiser returns are maximized through the promotion of certain functional standards.

And so the search for the most appropriate business models for APIs continues...

Be sure to read the next Financial article: Mashup Business Models on CNET