jimbanks - 11:33 pm on Sep 8, 2012 (gmt 0)
out of the box Adwords is just plain horrible for first time advertisers, but it's better to have it, than not have it.
Google are not mis-representing what they sell. They make it really easy for a first time advertiser to serve themselves some ads. Chances are people will read a little bit about what to do, will follow the suggested path of keywords and price, which are based on the existing auction that is going on at the time they start.
What happens on Google will always be where the battle will start, I just think with video, mobile, social, site speed, analytics, lifetime value, sales funnels there are better uses of budget than trying to squeeze more out of a model that I think we all agree could be better than it currently is.
Maybe we agency/consultant people are the idiots for even trying to put forward opinions.
The original question was about Google sustaining prices, but Google don't set the prices, the advertisers do. If you sold something totally off the wall and there was nobody else that did, you could and would get super cheap traffic, if you set your bid prices in that region.
I've NEVER set a bid price at the suggested rate Google put down, sometimes it's a lot more, other times a lot less. Occasionally, the price I end up paying is what they suggest, but I never start at that point.
There are numerous places where you can serve ads in rotation for 10 cents a click, some for even less than that, but quality and quantity of traffic will always mean that scenario won't play out. The minute people "find" a new source, they will blog about it. tweet about it and the 10 cent clicks become $2 clicks and advertisers vote with their feet.