LucidSW - 2:03 pm on Aug 25, 2012 (gmt 0)
It's hard to see the future clearly. More so when it appears PPC cannot be different than it is now. Things do change and so will PPC most likely but not in the ways you may think.
>> the space is going to get limited and the barrier to entry will get more difficult with time.
Not sure what you mean by the first part, space is going to get limited. I think you mean, given there's only so many ad spots, that's the limit. Technically, that's not true. There's an infinite number of spots available, but only a certain number per result page. Don't forget there's more than the first page, although that's where you want to be. Also, it's not always the same advertisers. Many reasons why some advertiser ads don't show which means to fill the inventory, another advertiser takes their place. So I don't agree with the comment that space is limited.
I do agree with the second part. In fact, it's difficult now and really has been all along although maybe more so these days because of more competition and the system itself having evolved. I don't do ads the same way today I did two years ago because of the changes. I had to adapt to take advantage of new features. That's something the regular Joe is not doing. That makes it more difficult for him and also a reason my PPC management business is doing better, as it appears Rhino's is as well, at least for the Joes who realize they need to do PPC but also need expert help.
How much is the market willing to pay?
As much as they are willing and able I guess. One thing most don't seem to realize is this: the advertisers set the prices. They are also the ones in control of their ads' quality. There are too many getting in and not understanding. Therefore their quality is low. Many compensate with higher bids, maybe higher than they should be and that's what drives prices up.
In most cases however, at least in my mind, if you've been doing Adwords for a while and have high quality, your CPC shouldn't really go up that much. You may see blips once in a while and my guess is a new advertiser that overly bids. Once they discover the error of their ways, they leave or adjust and things go back down. The problem is in a crowded field, someone else will replace them so the CPCs are artificially high. The only way to protect yourself as much as possible is increasing your quality.
The same thing will happen on other search engines, if you believe that advertisers will migrate there. In fact, I don't see things being any better now. One client of mine is on both Adwords and Bing where his CPC is higher, a bit lower position and lately, lower conversions.
>> Eventually the model that they are using will not last.
Totally disagree. The model works for all involved. If only advertisers would be smarter, that would bring down costs. But I don't expect that to happen.
Do you have another model in mind? A fixed price? That won't work.
The only new thing on the horizon is image ads on searches, Google Merchant. I'm guessing in a few years it will be video ads.
>> Would USERS switch to an engine that featured more competitive merchants?
Excellent question. I guess for those in the buying mood, I would say yes. After all, when you are ready to buy, you go to comparison sites. I think Google is headed in that direction with Merchant. It could mean a bigger piece of the pie for them.