Ads Reductions

....is it over yet?

[Visi]

Found this article interesting reading as to what advertisers are having to say about google and advertising.

link to article [marketwatch.com]

[edited by: encyclo at 2:02 am (utc) on Jan. 4, 2007]
[edit reason] fixed side-scroll [/edit]

[koan]

Some advertisers complaining Google's cut is too high? That would be like motorists complaining gas prices are too high. What a scandal. I'm sure the era of cars will be over any day now.

But more seriously, they already admit at the end of the article that things are going better since they learned to better convert users. What a concept.

[FourDegreez]

The article is saying that some advertisers are having a hard time bidding on keywords because competition is too fierce. That sounds like fantastic news to us publishers, some of whom fear that supply of ad impressions may outpace demand.

To a large degree, the dissatisfaction with Google's advertising is due to the phenomenal success the company has had in persuading other firms to advertise their products and services using Internet search keywords.

The low cost of keyword search advertising relative to older media like television, radio or even local yellow pages has lured many traditional retailers into advertising online. That's created more competitive bidding for popular Internet search terms, inflating their cost.

Sounds good to me.

[malachite]

But more seriously, they already admit at the end of the article that things are going better since they learned to better convert users. What a concept.

My sentiments exactly. Some ads are so badly written, ambiguous and/or poorly targetted, it's not surprising they don't convert. Plus some of the landing pages are so c*%p, the visitor isn't going to be inspired to trust the site.

Sure ad prices have gone up, but the advertisers could do a lot to help themselves.

[trinorthlighting]

This is interesting. We have adsense on our ecomerce sites and we also have used adwords in the past.

What we are finding ourselves for lower priced items are that advertising is not worth it:

1. Product costs $10
2. Adword Click costs $1.00
3. Have to have 10 clicks before a conversion, people love to shop!
4. Product Cost + Advertising Cost equals $20 total
5. Product Retails $20 (100% Markup which most do not have the luxury of)
6. Break Even
7. Have to pay credit card processing fees
8. End up having a net loss.

Now, on the flip side we do have some sales in the $1000-$10000 range. There the pay per click is well worth it.

It really boils down to the following:

1. What you sell, ebags sells a product that I can find in K-Mart, Walmart, Sears and basically any shopping center or mall. Competition is fierce!

2. If you want your name to be plastered all over the world and become a household name like sears, walmart, etc.....

[ndaru]

I agree that every words on the ad should be inside the landing page. Relevance is good. Tricking is bad.

OK, so you grabbed a nice product. Built a nice landing page. Created an Adwords campaign with relevant texts with no misspellings.

Then you found out that Google asked a minimum 0.30 US$ CPC for your choice of keywords. Reason? Google has not yet decided your level of 'worthiness' or 'trustiness', i.e. they has no history about your campaigns, yet.

So, you ended up having to prove your 'worthiness' to Google, i.e. good CTR and good 'user experience'. And you stuck with 0.30 US$ keywords.

Now, you have to make a good ROI to justify your sweat, tears and blood. So the math goes like this:

- 1 conversion for every 100 clicks (this is your first try and apparently your landing page is not very good)
- cost per sale = 100 clicks * 0.30 US$ = 30 US$

Revamp your campaign, find new products that will give you more than 30 US$ profit for each sale, so that you will have a feasible ROI.

Then, after a history of good CTR, you can hope that Google will lower your CPC. Or not.

Congratulation, your life is now fully depend on an algorithm that prones to 'upgrades' from time to time. With hundred of thousands of advertisers, you should quit expecting a manual human review of your landing page 'worthiness'.

[joelgreen]

Nobody (or few) would advertise using AdWords if google's cut was to high. But seems like "lack of advertisers" is not an issue for Google :) So I would assume everything is ok.

[trinorthlighting]

People will only bid on adwords as long as its profitable. So when it becomes unprofitable, people will back off a bit. So there is a balancing act to each keyword and a breaking point as well.

[Huntster]

As long as 90% of sites can't SEO themselves out of a paper bag - they'll always be gobs of adwords advertisers bidding and debting themselves to get traffic and business in everything we can imagine. I have met first time SEO clients of mine and they actually would brag about their $3000 a month adwords budget, while they get no free search traffic. There are tens of thousands of these people.

I would expect the competition to only go up in the future and adsense publishers to continue to benefit (at least the smart ones), as Google is the name that average site owners know and trust to bid with.

We are the lucky small % who really know the deal. We should all plan on earning from that knowledge advantage in the future.

[edited by: Huntster at 3:49 am (utc) on Jan. 6, 2007]