In a move that is sure to ruffle a lot of feathers in the SEM agency and developer world, Google has announced that its adwords API is going commercial. The Adwords API allows software developers to design applications that send and receive data to and from its keyword ad auction. Beginning on July 1, 2006, use of the AdWords API will be avaialable on a per-use basis, with different API functions incurring different costs. Hold on a second Neo, the rabbit hole goes much deeper:

1. The API is no longer free
2. Anyone using the service for commercial purposes must not intermingle it with another service. That means no single interfaces. It also means that companies like AtlasOnePoint, KeywordMax and Omniture are sort of screwed.
3. It means that agencies and small SEO/SEM companies might have to start building their own internal applications to avoid extra cost and to be able to combine services from Yahoo and Google.

Of those I think the 2nd point will have the biggest impact. A change like this has the potential to shift not only this industry but every industry that has sprung up around the notion of mashups. What if other companies supplying APIs were to start charging? What if god forbid Google starts charging for access to Google Maps? This is likely to cause a lot of debate in the SEM industry, but my fear is that it will lead other companies to charge for access to their APIs as everyone plays follow Google again.

For more details on these changes see the Google Blog.

Update: It was pointed out to me that this could also have a negative impact on Google in the highly competitive search engine market place. This is very true, but what if others follow suit? Back when I was at Prodigy the dial-up market was highly competitive (yes this was a few years back). AOL decided to raise the prices from the average $11 dollars a month. Through a growing MSN dial base into the mix and pretty soon before you knew it, everyone was raising their prices. You would hope that the others (MSN and Yahoo don’t follow suit). This is however the first time in a many years that Google has done something in which people are not that thrilled.