The Future of Adword.A Possible Rant.But True None the Less

Adwords, PPC, CPC

[rankmaster77]

I know this has probably been discussed, but I am curious to know how other forum members feel about where the future of Adwords is headed, especially when it relates to CPC and Keyword Bidding.

I've been managing an account for a little over 2 years, with a very healthy budget for a small business, it exceeds a little more than 1 million dollars.

When we first started there were very few people in our space and naturally as the business grew, more competitors came in and began bidding on our keywords, the price of the KW slowly began increasing and obviously today the price per KW has increased significantly, even though we have maintained and progressively increased our CTR, spend lots of cash and convert.

So what can we look forward to with Adwords as we head into the future? Its seems to me that as we and other businesses continue to market on the web, the space is going to get limited and the barrier to entry will get more difficult with time.

Question: How much is enough? And what will the market be willing to pay for space on Google in the future? Will small businesses be squeezed out by the bigger guys eventually? Will Adwords be a relevant avenue for small to medium sized businesses?

As more markets become saturated I dont see how Google can manage this unless they put some controls on costs. What i do see is an opportunity for other search engines to offer better, cheaper space on their serps.

Again, I am sure this has been discussed before but I really would like to hear what others think. Personally I see a very difficult road ahead for businesses and just like SEO, which has already begun to fade and is becoming more difficult by the day, I believe Adwords is going to get just as bad or even worse....

Thoughts anyone?

[TypicalSurfer]

With large advertisers spending less on newspaper adverts (which is what I see) they may have more money to spend (waste) on high ppc click bids.

I'm seeing better ROI's with good old direct mail, also beginning to see former big adword buyers on teevee. The post office is still fixed price, no need to bid on postage or tweak delivery every few minutes.

[snoopy1122]

Ok Snoopy, so pay $20 a gallon on gas...There needs to be a balance.

Not sure where you live, but I've not heard of price controls on petrol. If it goes up dramatically (as it does at times), then that is the market. If it is at a point where people can't afford it then they'll stop buying or get more efficient cars. In the PPC world they either pull out or increase the efficiency of their ad.

With PPC it makes sense that most will think the tops bid are too high on competitive terms, as there can only be one person in top place at any time.

Having said a fair of what I've read over the last couple of years talks about falling CPC's, eg reading Google financials. That has been my own experience largely as well. I wonder if many people's bid rising is more to do with competitors being far more efficient (ie better CTRs?).

Agree with what RhinoFish has said above.

[Leosghost]

France just fixed the price of Petrol for the next 3 months..no links as yet in English..the announcement was made by the Government 28.08.2012 takes effect at midnight 28.08.2012 ( about 20 minutes from now ..in France..might actually take 24 hours to change all the prices shown at the stations etc ) link in French..price will drop by about 6 centimes per litre..2 major retailers ( l'eclerc and group U ) say they will also sell at cost price for 30 days..

[fr.news.yahoo.com...]

FYI :)

[TypicalSurfer]

I got a better price on a loaf of bread today because I could do math problems faster than the lady behind me (she paid more). They call it "smart pricing" but the lady who paid more was none to happy, claimed it was discriminatory.

[snoopy1122]

France just fixed the price of Petrol for the next 3 months..no links as yet in English..the announcement was made by the Government 28.08.2012 takes effect at midnight 28.08.2012 ( about 20 minutes from now ..in France..might actually take 24 hours to change all the prices shown at the stations etc ) link in French..price will drop by about 6 centimes per litre..2 major retailers ( l'eclerc and group U ) say they will also sell at cost price for 30 days..

If the price is fixed under the market rate then it will simply result in a shortage.

The PPC comparison is probably Overture fixing bids on terms at $100 several years ago. The result of that was half a dozen people all with $100 on some terms and the ranking done on some arbitrary way that made no commercial sense. There is no opportunity for the best converter to get more traffic because they are treated the same way as the 6th best convertor.

How about taking the extreme example, imagine if all bids were 10 cents. Great until you realise 100 other companies will also pay 10 cents so your actual ranking is nowhere to be seen. People need to compete instead of complain.

[Leosghost]

If the price is fixed under the market rate then it will simply result in a shortage.

Those who live near the borders already buy on the "other side" where it is always cheaper..there will be no shortage..there is no "market rate"..there is only the hitherto artificially manipulated higher price in France..

No doubt those in the UK who pay even higher prices will fill up before going home after their holidays..as do truck drivers when leaving Eastern Europe to come here..

However this was merely to demonstrate 2 things ..

What one "knows" or has "heard of" relative to economics, should not define what one says exists..or can exist..and work..

The second thing is that economics is very much more complex that you have been led to believe, by those who gain from your misunderstanding..

[snoopy1122]

Those who live near the borders already buy on the "other side" where it is always cheaper..there will be no shortage..there is no "market rate"..there is only the hitherto artificially manipulated higher price in France..

No doubt those in the UK who pay even higher prices will fill up before going home after their holidays..as do truck drivers when leaving Eastern Europe to come here..

However this was merely to demonstrate 2 things ..

What one "knows" or has "heard of" relative to economics, should not define what one says exists..or can exist..and work..

The second thing is that economics is very much more complex that you have been led to believe, by those who gain from your misunderstanding..

I don't think this is even "price fixing". The government has temporarily lowered the tax level on fuel, and the fuel companies have agreed to match it. If it is fixed, what price is it fixed at exactly?

[Leosghost]

€1.40 per litre diesel
€1,58 per litre 98 octane unleaded..

The final prices per litre may be 2 cts above or below those, the final fixed prices will be published during the course of 29.08.2012 by the government..Fixed prices..

Both these figures were given in the link I gave to Yahoo..

However the point is fixed prices can and do exist for petrol..

The problem with Google's adwords pricing model is not that it is not fixed ..it is that it is totally opaque..

You only have Google's word for it that you need to raise your bid to beat anothers..and the QS is a scam..Google allows you to compensate for low quality landing pages by paying more ..

So someone with deep pockets can make inaccurate ads and show higher than someone with less money and accurate ads and accurate landing pages..

I saw examples of this today..researching my competitors..
They buy ads ..I use organics..

The number 1 ad led to a landing page which did not have the article advertised .the number 2 ad led to a page which did have the article advertised..

The number 3 ad was totally off target, did not have the items advertised on the entire site..

I have the number 1 organic slot..I have the article they were all claiming to have..better quality at less than 75% of their price ..

They are retailers..I manufacture..

They retail at 3 times what they pay wholesale..

Their retail is 9 times my cost price..

I could spend more on each ad than they sell their items for..

QS would let me..even if my ad was crap and so was the landing page..my ad would be 1st..

BTW..the items ( apparel ) go for over $250.oo each on sale or at my site(s) and some retailers sell them for over $350.oo..which is a little less than 10 times my cost..

So QS would not allow them to compete ..if I was their competitor buying ads..

[snoopy1122]

You only have Google's word for it that you need to raise your bid to beat anothers..and the QS is a scam..Google allows you to compensate for low quality landing pages by paying more ..

So someone with deep pockets can make inaccurate ads and show higher than someone with less money and accurate ads and accurate landing pages..

I saw examples of this today..researching my competitors..
They buy ads ..I use organics..

The number 1 ad led to a landing page which did not have the article advertised .the number 2 ad led to a page which did have the article advertised..

The number 3 ad was totally off target, did not have the items advertised on the entire site..

I have the number 1 organic slot..I have the article they were all claiming to have..better quality at less than 75% of their price ..

They are retailers..I manufacture..

They retail at 3 times what they pay wholesale..

Their retail is 9 times my cost price..

I could spend more on each ad than they sell their items for..

QS would let me..even if my ad was crap and so was the landing page..my ad would be 1st..

BTW..the items ( apparel ) go for over $250.oo each on sale or at my site(s) and some retailers sell them for over $350.oo..which is a little less than 10 times my cost..

So QS would not allow them to compete ..if I was their competitor buying ads..

How does any of what you have said make QS a "scam". If someone wants to place high bids because of low quality ads that is their choice. If there was no QS non converters would rank even better. QS acts as a penalty to poor converters, it is levelling the playing field.

Why aren't you buying ads? Are you not able to compete with the other bidders? If so what do you think the reason is?

[Leosghost]

How does any of what you have said make QS a "scam"

Because it does not equalise the playing field between those with more money to spend on ads and those with less, as it was claimed at the introduction of it..

I argued with Adam from Google around precisely this point at the time ..you don't improve "quality" by paying more..it is merely a way for Google to obscure what is possibly going on even more..they can squeeze both those with large and small budgets far better by adding this obscuring layer, than they could prior to it..the idea of calling it "quality score" was to give it an air of respectability..

Why aren't you buying ads?

I don't need to..:)
I sell 1 item, I make at minimum 3 times the profit of those who are buying ads..frequently I'm actually making 5 or 6 times what they are making per sale..
The number 1 organic slot on most SERPS gets very nearly the same number of clicks per search as the top 1,2 or 3 spot ads ( those above the serps..the ads at the side do less well than the top 3 organics )..if the search term is an exact match as mine is then I actually will get more click throughs than the number 1 ad ..especially as the KW is highlighted twice in my description and only once on their ad..
So why would I throw money away ?..

Are you not able to compete with the other bidders?

You have not been paying attention..I make more per single click that I get at number 1 organic , than they make in 3 clicks at number 1 adwords..and that isn't counting how much they pay for the ads..

CPC on that particular KW is around $2.50 to $3.oo

I don't need to pay..:) ..not for the traffic, nor for "branding" ..I am a "brand"..they are selling the brand(s) that their wholesalers supply them with..their wholesalers buy from someone else who owns "brands"..and those owners manufacture in the same place I do..

I only sell direct to end customers..*

You need to study economics in the real world to understand why I neither want, nor need to buy ads , but why I also can then " with no axe to grind" and "no sour grapes", say that Google's QS was/is designed only to make Google even more money, and to further obscure the black box bidding system they use..

It may "penalise badly converting ads"..but it's primary function was to increase Google's profits and their margins from where they were before its introduction..

Overall CPC revenues for G jumped from the moment it was introduced, and have climbed ever since..just read their financial reports..

* One manufacturer that I'm aware of sells both wholesale and retail, their retail is about average price..they also don't buy ads..

Another manufacturer sells to a wholesaler who then sells onwards via affs..the affs buy ads..the manufacturer does not..

[Leosghost]

QS could only be "leveling the playing field" if the more accurate ad and landing page could result in the ad rising from say position 2 above SERPS to position 1 above SERPS, or moving from the side to above the SERPS..

I monitor various items, in various "niches" ads and organics, I do not see movement in ad positions reflecting accuracy of ads in relation to landing pages..
I do see SERP movements..in organics in thse same "niches"..

So ..it appears, in these niches at least, that if one pays enough, a competitor with a better ad and landing page can still be kept down, by outspending them..despite what Google say to the contrary..

If the idea is to present the searcher with better quality and more accurate SERPS and better quality and more accurate ads in relation to their landing pages..

It is failing..in those niches..

If that was ever Google's real intention with regards to QS, ( which I have always doubted despite their PR around the issue ).. in some niches the rich players appear to be able to "lock in" their ad positions..to the detriment of other advertisers and searchers who click on ads..

But Google gets richer with the QS score as the average CPC rises due to it..every year..

Your niche(s) may vary..

BTW..the general SERPS here ( France ) still contain a very high number of shopping comparison sites ads above SERPS..and on click through they very rarely have the advertised items..not a "quality" experience..but they appear welded to their slots for certain items and niches since months if not years..

[snoopy1122]

I argued with Adam from Google around precisely this point at the time ..you don't improve "quality" by paying more..it is merely a way for Google to obscure what is possibly going on even more..they can squeeze both those with large and small budgets far better by adding this obscuring layer, than they could prior to it..the idea of calling it "quality score" was to give it an air of respectability..

Advertisers drop off, that is how quality is improved.

Why aren't you buying ads?

I don't need to..:)
I sell 1 item, I make at minimum 3 times the profit of those who are buying ads..frequently I'm actually making 5 or 6 times what they are making per sale..
The number 1 organic slot on most SERPS gets very nearly the same number of clicks per search as the top 1,2 or 3 spot ads ( those above the serps..the ads at the side do less well than the top 3 organics )..if the search term is an exact match as mine is then I actually will get more click throughs than the number 1 ad ..especially as the KW is highlighted twice in my description and only once on their ad..
So why would I throw money away ?..

Are you not able to compete with the other bidders?

You have not been paying attention..I make more per single click that I get at number 1 organic , than they make in 3 clicks at number 1 adwords..and that isn't counting how much they pay for the ads..

You might make more per click and have better margins but those guys will be getting sales. Have you seen the effect on sales when you are also no.1 on adwords?

say that Google's QS was/is designed only to make Google even more money, and to further obscure the black box bidding system they use..

It may "penalise badly converting ads"..but it's primary function was to increase Google's profits and their margins from where they were before its introduction..

Of course, because it rewards those with high CTR's. Are you suggesting Google should do something with an aim other than increasing revenue? Google interests are largely aligned with increasing sales/conversions of merchants.

Basically the system has evolved to be more impression based than per click because of all the quality adjustments that start with CPC and turn it into something else by accounting for quality. The people who can spend the biggest overall amount to be no.1 win & that makes sense because that person is highly likely to be the person who can make the most from the traffic.

[Leosghost]

You might make more per click and have better margins but those guys will be getting sales. Have you seen the effect on sales when you are also no.1 on adwords?

Read again..the top #1 organic makes almost the same number of click throughs as does the top #1 ad if the terms are exact match on the organic..and they convert almost exactly the same, if anything the organic conversion rate is slightly better..

They may get 20 clicks ..I will get 19 or 20..we will both have the same potential conversion rates ( on this item it converts higher than the average ..if one actually has the item ..I do:) . .they don't :)..conversion is about 5%, as against an average of 2 % for most things advertised )..In this niche it is about the sale, but also about customer acquisition costs..they lose on the sale,( given their cost per 100 clicks on their ads ) but they may acquire a customer..

I have no ads to buy ..no customer acquisition costs..but I acquire a customer ( remember I'm cheaper than they are , better quality, and I even offer freebies, because I can, customers compare, and they come back :) )..and I make a sale ..it is all profit..I'd be crazy to buy ads..I'm getting at least 95% of the clicks that they do, making way more money on each conversion ( and remember we are both converting at about the same 5% or I'm actually doing better than the advertiser(s))..and no hassle or adwords outlay..

Are you suggesting Google should do something with an aim other than increasing revenue?

Absolutely not :) ..I just wish that they would quit trying to pretend that their real reason is because they are "happy elves" only doing it for the good of "searcher kind"..they are doing it to make money, and playing at social engineering whilst making that money..

The people who can spend the biggest overall amount to be no.1 win & that makes sense because that person is highly likely to be the person who can make the most from the traffic.

Make more sense if the person who got the number 1 slot ad actually had to have what they were advertising ..some merely use their deep pockets and how that allows them to manipulate QS to wipe out competition with less deep pockets..frequently via cross selling and or loss leading..makes a mockery of what Google "claims" QS is meant to be ..or a mockery of the searchers who actually want to buy what is advertised and not be led a dance by someone who hopes they'll just by something while they are trying to find what was advertised..

Or that the advertiser who does actually have the advertised goods will go broke trying to keep up ..that is not good for the customer/ searcher either..

But that way of thinking ..is what got G so big..

[snoopy1122]

Read again..the top #1 organic makes almost the same number of click throughs as does the top #1 ad if the terms are exact match on the organic..and they convert almost exactly the same, if anything the organic conversion rate is slightly better..

They may get 20 clicks ..I will get 19 or 20..we will both have the same potential conversion rates ( on this item it converts higher than the average ..if one actually has the item ..I do:) . .they don't :)..conversion is about 5%, as against an average of 2 % for most things advertised )..In this niche it is about the sale, but also about customer acquisition costs..they lose on the sale,( given their cost per 100 clicks on their ads ) but they may acquire a customer..

I have no ads to buy ..no customer acquisition costs..but I acquire a customer ( remember I'm cheaper than they are , better quality, and I even offer freebies, because I can, customers compare, and they come back :) )..and I make a sale ..it is all profit..I'd be crazy to buy ads..I'm getting at least 95% of the clicks that they do, making way more money on each conversion ( and remember we are both converting at about the same 5% or I'm actually doing better than the advertiser(s))..and no hassle or adwords outlay..

That doesn't actually answer the question, "Have you seen the effect on sales when you are also no.1 on adwords?"

I think you are making a lot of guesses here (I'm assuming from your response you haven't tried adwords with it). You might be getting 95% of the volume of no.1 in adwords spot but you are probably missing half the market.

If you think they are converting at 5% then you are losing sales to them by not being in adwords.

[Leosghost]

I don't care about a few lost sales ( I'm converting at about 5% already via organics ) compared to the hassle of running adwords ..and the idea of trusting G with a line into my cards / bank and having to take their word for what was displayed / clicked upon, and when..no way :))

I don't trust them ..I've seen them lie..more than once..

Nor am I interested in monopolising my niche(s)..that way lies Maya..

[LucidSW]

>> You only have Google's word for it that you need to raise your bid to beat anothers..and the QS is a scam..Google allows you to compensate for low quality landing pages by paying more ..

See, to me you take the wrong approach and the approach Google itself doesn't want you to take. The idea of QS is to get better quality from advertisers. True, you could increase your bid to achieve better rankings and pay more as one would expect when using this approach. But you're missing the point that you could achieve the same results by increasing your quality. Google actually is telling you to do this because that's what they want. They make more money if you increase quality rather than your bid. You said it yourself, you don't improve quality by paying more and I agree. But that's exactly what Google doesn't want you to do (increase bid).

You also have to use your own logic. If you sell insurance, don't bid $1 when the market rate to get a new customer is $5, even if your QS is 10. There are others with high QS so if you bid too low, you'll still be behind those bidding the going rate. So yeah, you only have Google's word for it but it's driven by the advertisers in that vertical.

>> So someone with deep pockets can make inaccurate ads and show higher than someone with less money

What would be the point of that? They'd just waste their money and even those with deep pockets have a limit.

I've seen the example you give many times. It's just advertisers not knowing how to do things right and sending all clicks to the home page for example. That's not Google's fault and there's nothing much they can do about the less smart or just plain lazy advertisers. Their job is really done once they serve the best quality ads they can based on the data. In this case, the advertiser will suffer. As Snoopy said, QS levels the playing field.

>> the top #1 organic makes almost the same number of click throughs as does the top #1 ad if the terms are exact match on the organic

You have data, a link to back that up? Actually, I think you may be correct on this as it would be my intuition. As for converting the same, that I'm not sold on.

I've seen the effect on conversion by being in the top spot. This from many client account data. It's actually quite eye opening. I agree with Snoopy that you are losing sales to competitors by not using PPC. But you say you don't care so I'm not sure why the argument.

[RhinoFish]

I got a better price on a loaf of bread today because I could do math problems faster than the lady behind me (she paid more). They call it "smart pricing" but the lady who paid more was none to happy, claimed it was discriminatory.

Bahahahahaaa! That was funny!

[Leosghost]

Hard to know where to begin..you appear to have been reading another thread from time to time*..

the approach Google itself doesn't want you to take. The idea of QS is to get better quality from advertisers

That is what they claim..I find your faith in them truly meaning what they say, touching..

you could increase your bid to achieve better rankings and pay more as one would expect when using this approach

*I'm not bidding..I said on numerous occasions that I'm not buying ads..

But you're missing the point that you could achieve the same results by increasing your quality

Again..*I'm not bidding..I said on numerous occasions that I'm not buying ads..
But, if your proposition was true, out in the real world, the better quality ad ( because it actually matches the precise search term(s), and the page it takes one to actually has the item advertised, in the adwords ad ) should move up over time..Especially it should move from number 2 ad slot, to number 1 ad slot..and again, especially if the ad at the number 1 ad slot, does not precisely match the search term(s), and if the page it takes one to, does not have the item which is advertised in the ad..and in fact the advertised item does not exist and never has done on the entire site..a "clickbait" ad for something one does not have..is not higher quality than an ad that does lead precisely to what is advertised .and to what the precise search terms were searching for..

They make more money if you increase quality rather than your bid

Again..*I'm not bidding..I said on numerous occasions that I'm not buying ads..
Ah..so you think that if an advertiser improves the quality of their ad, it's relevance, and the quality of their landing page and it's relevance to their ad..and so does not have to pay Google more for the ad..that somehow makes Google more money ? ..:)
100 clicks at $3.00 per click is still only $300.oo to Google ..even if the ad and the landing page are better quality..

But that's exactly what Google doesn't want you to do (increase bid).

You have that exactly 180 degrees wrong..you really have bought into the "happy elves"..or it is because your services sold depend upon the percentage you can take of ad spend or conversions for relieving your clients of the burden of decrypting Google's double speak and goalpost shifting..I have no problem with the existence of your model, but I do not have "mark" tattooed across my forehead ;)..

Hence I do not use adwords when I can get the CTR and conversion rates I wish via organics..I come from a background of very many years of working with and in ( mostly very many years of "in" :) advertising, the mendacity endemic in proponents of my old profession, did not disappear when CPC began and actually increased with the adoption by Google of QS..And it swelled to gargantuan proportions with the arrival of facebook..

You also have to use your own logic. If you sell insurance, don't bid $1 when the market rate to get a new customer is $5, even if your QS is 10.

I was not discussing getting a new customer..
I was discussing QS related to ad placement, they are not the same thing..
Customer acquisition can only be done after the ad is displayed and clicked..the point is about where it is displayed..

There are others with high QS so if you bid too low, you'll still be behind those bidding the going rate.

The "going rate" is hidden from you..So you actually only have Google's word that the "going rate" exists..and that the "going rate" is the same for all bidders..if the rate is not the same for all participants..there is no "going rate"..

So yeah, you only have Google's word for it

True ..precisely my point :)

but it's driven by the advertisers in that vertical.

And you believe that because they tell you it is so..
I don't..:)
It could also equally well be that each "mark" is squeezed for what Google thinks they can bear..and as long as each cannot know the others bid..that is also perfectly possible as an explanation..and is one which would explain the ever increasing price per average click..increase at way over inflationary rates or price increase rates for the products and services sold by the industries and businesses advertising..

What would be the point of that? They'd just waste their money and even those with deep pockets have a limit.

The concept of "loss leaders", and "selling at a loss", or "giving away until the competition goes broke", at which point, one can then hike ones prices, is not one that you have seen ? ..you have not been watching, let's say, Google and the purchase of Urchin and the giving away of analytics ?..and it's effects on other pre existing paid analytics packages from other companies..research "cross subsidising" ..you might be surprised at what you find..:)

It's just advertisers not knowing how to do things right and sending all clicks to the home page for example.

It is not "just" meaning as in "only"..but agreed :)..many advertisers will send their traffic to the wrong place..but when they advertise what they do not have and never have had..that is different..n'est-ce pas ? ;)
QS ( if applied as Google claim it is ) would lower their ad's position..it doesn't..as long as they spend more..

That's not Google's fault and there's nothing much they can do about the less smart or just plain lazy advertisers.

See the foregoing..they could lower the ads position ..even if the advertiser ups their bid..they claim that QS can / should do this. it does not always..

Their job is really done once they serve the best quality ads they can based on the data.

They are not always serving the "best ad they can", and they do always have the data..

In this case, the advertiser will suffer.

The advertiser will pay more ..
But the better ad below it does not gain..although Google does get richer ;)
thus

As Snoopy said, QS levels the playing field.

There is no "leveling of the playing field" ..if there were the low QS ads would fall and the good QS ads would rise..it would not be possible, to stay on top by paying more, if one's ad was lower quality, than the ads below..

You have data, a link to back that up? Actually, I think you may be correct on this as it would be my intuition. As for converting the same, that I'm not sold on.

I posted a few days ago, in a different thread, a search term that will get you a link to one of many "in depth" studies on the subject..including comparative conversion rates between ad slots positions and organics positions..there are more ..but that will do for most people to get started , and it is all in the same place, further than that..search and ye shall find ;)
[webmasterworld.com...]
msg:4488913

I'm not sure why the argument.

I was not arguing..I was correcting a widely believed fallacy..:)..in fact, more than just the one :)

One does not have to be getting wet oneself, to notice that it is raining, and to tell others that there is more than the umbrella salesman's way, to stay dry..:)

[LucidSW]

>> I find your faith in them truly meaning what they say, touching.

That's because I've created and managed so many campaigns in the last ten years, I have seen how it works. I've experienced it myself. So yes, what they claim is what is indeed happening, no question.

I know you're not buying ads. I wasn't talking just to you personally but to the community.

>> the adwords ad ) should move up over time

And they do so correct on that point. This can be easily shown when you have the data.

>> does not have to pay Google more for the ad..that somehow makes Google more money ?

Precisely! Do the math. Two ads, one with a 2% CTR and paying $0.30, the other with a 5% CTR and paying $0.15. For every 1000 impression, the first nets Google $6 while the second nets them $7.50 despite paying half as much. That's the power of a higher click rate and that's why Google wants you to improve quality (aka CTR).

>> it is because your services sold depend upon the percentage you can take of ad spend

I don't charge a percentage of spend. Never have. I believer it's more fair to the client and my continued relationship with them is more dependent on results which is maximizing quality clicks at lower CPC.

>> and that the "going rate" is the same for all bidders

No it's not. The going rate is whatever each advertiser sets their bids to. So if your ad's QS and bid places you in a position where the competitors around you bid an average of $1, that's the going rate at that position.

Google does advertise the "going rate". Just take a look the keyword tool. It tells you that based on an average QS, you'd have to bid so much to be in the top positions. If your QS was lower, you'd have to bid more. If it was higher, you'd have to bid less.

>> if there were the low QS ads would fall and the good QS ads would rise.

Again, they do exactly that. You don't know that because you don't use the system. The leveling of the playing field is that, unlike Overture years ago, one cannot achieve a higher position only by bidding and paying more. One has to take quality into account.

>> I was not arguing..I was correcting a widely believed fallacy

You are not correcting, more like expressing an opinion of what you believe to be true. However, you are wrong on all points and others will back me up. And you say you don't use Adwords which makes me wonder where you get those opinions from.

[Leosghost]

And they do so correct on that point. This can be easily shown when you have the data.

I have see that they do not on certain searches..I do not need "the data" ..my eyes suffice..:)

>> does not have to pay Google more for the ad..that somehow makes Google more money ?

Precisely! Do the math. Two ads, one with a 2% CTR and paying $0.30, the other with a 5% CTR and paying $0.15. For every 1000 impression, the first nets Google $6 while the second nets them $7.50 despite paying half as much. That's the power of a higher click rate and that's why Google wants you to improve quality (aka CTR).

I gave the example of 100 ads clicked upon at $3.oo..makes G $300.oo the CTR and then the same ad with "improved quality" .. ( which was your example too ..not a second ad ) would still only make them, Google, $300.oo..

if we are discussing "an apple", your switching to "two oranges", does not refute what I said, about "an apple"..

I said..

or it is because your services sold depend upon the percentage you can take of ad spend or conversions for relieving your clients of the burden of decrypting Google's double speak and goalpost shifting..I have no problem with the existence of your model,

The precise details of the remuneration models of those who only act as intermediaries for adwords does not really matter..without adwords they would have no business..and if they truly were "expert" they would use their knowledge to make their fortunes directly, as successful affiliates or merchants, not rent it out, for way less than it's potential..to others..

The phrase "the going rate" does not means what you think it does..:)

The "going rate" for an item does not depend on who is asking ..it is not different for each person asking..

There can only be one "going rate" for a #1 ad spot for a search term..not many "going rates"..or you must choose another phrase..

Google does advertise the "going rate". Just take a look the keyword tool. It tells you that based on an average QS, you'd have to bid so much to be in the top positions. If your QS was lower, you'd have to bid more. If it was higher, you'd have to bid less.

And if you invent a nonsense keyword ( this has been done, even has been mentioned by others here in the past )..and then try to "set a bid" at 10c ..Google's qs system "says not high enough"..but there can be no other bidders, because the keyword was made up just before...there can be no"average QS" to beat or outbid..But Google's system is built to make you believe there are other bidders..and you and the others who act as middlemen to it, go along with that fiction..

>> if there were the low QS ads would fall and the good QS ads would rise.

Again, they do exactly that. You don't know that because you don't use the system.

I don't need to use the system ..I can see the ads, with my very own eyes..and the positions don't change sometimes for months..

It is simple..:)

Your ( and all the other adwords intermediaries ) business model ( whatever the details of the remuneration method) depends on the existence of adwords..mine does not..

Thus you must profess to believe in it, before the watching gallery ( if there be one )..in the same way that a priest, mullah or shaman has to say, before the crowd, that they believe in a god..or they would be out of a job..

Or..to use another simile which we use here often.."fishing"..

Conversions / customers are "fish".."Goog" ( your friend ) sells "fishing nets"..

I make my own "fishing nets"..and I'm saying that others can make their own "fishing nets"..and that they won't have to pay me if they do..and that they will work every bit as well as the ones that "Goog" sells..

You are saying that "Goog's" fishing nets work better, and that "you" can get folks a better deal on "Goog's" fishing nets for them, than if they went to "Goog" themselves..that is "your" business model..

Who do you think is impartial on the subject of fishing nets..the guy with nothing to gain by reporting his observations ( me )..or the guy ( you ) whose business is based on "Goog" selling fishing nets..

others will back me up

Others whose businesses also depend on them having clients who use them to buy "Googs" fishing nets are hardly unbiased too :)

makes me wonder where you get those opinions from.

By watching ads and their frequent lack of movement, for specific keywords in specific niches.. over long periods of time..

You asked a question..

What would be the point of that? They'd just waste their money and even those with deep pockets have a limit

To which I answered..

The concept of "loss leaders", and "selling at a loss", or "giving away until the competition goes broke", at which point, one can then hike ones prices, is not one that you have seen ? ..you have not been watching, let's say, Google and the purchase of Urchin and the giving away of analytics ?..and it's effects on other pre existing paid analytics packages from other companies..research "cross subsidising" ..you might be surprised at what you find..:)

But you appear to have ignored that answer..

You also asked for a "link"..

You have data, a link to back that up? Actually, I think you may be correct on this as it would be my intuition. As for converting the same, that I'm not sold on.

I referred you to a post I had made before with a search term to find the link..you appear to have ignored that also..or perhaps you did not find the page at SEObook that I was referring to..

As normally we do not link to blogs or SEO sites I had not linked directly..but as Brett has linked to Aaron's site today on another thread.. I'll send you and any other interested party directly to the page I referred to, in the other, thread above, "Google Ranking Worth" was "the term"..

[training.seobook.com...]

Now ..you'll forgive me, I hope, but after looking around other threads here, I have phone calls to make to my production staff , as even without using adwords :) we are selling the items I mentioned above at over 100 per week..and I'd like to make sure that we are ready to increase..also I need to reply to newly acquired customers..two of whom actually mentioned that they found "us" and "we" actually had the item, unlike the other 3 sites above us ( apparently the #2 site only had 3 in stock ) ..the customers were not aware that they had clicked on ads above us ..at least they did not mention "ads"..

I just checked ..( at 02.00 am here ) the ads are still in the same order ..no change, so the #1 must be paying Google in order for the playing field to not be leveled :)

My "fishing nets" are working better than the ones they are paying for..they are made with "observation"..they are not bought..from "Goog" or via any expert..anyone can make them..they do not need to buy them..and thus they will not be at the mercy of "QS" or dependent upon Google nets being affordable..

If Google disappeared tomorrow, my businesses which do not depend upon it for their existence would only take a small dip..because I have made them largely independent of Google,( and other search engines ) whilst still using Google ( and other search engines)..I suggest to others to do the same..even you..in fact especially those such as yourself, whose businesses are especially dependent upon adwords existing..Goog might one day make a really concerted effort to cut you all right out of the picture ..they began approaching adwords customers directly well over a year ago..they may yet make direct offers of deals that only they can do..

[LucidSW]

I don't know why I'm answering because your mind is made up and you won't look at the evidence. You'll trust your eyes when I can show you tonnes of data that shows improved QS improves ranking for the same bid and any other argument you want to make. You also must have photographic memory to remember all the ads you see and notice there's no change for months. It may be true for whatever niche you happen to be in, especially if there's only a few players but that is not necessarily true for all niches. In fact, it's not.

As for my example, I'm not switching apples to oranges. You are simply looking at it the wrong way. You're looking at the number of clicks. Google looks at CTR. I don't care that two ads get 100 clicks and pay the same amount. When you look at it that way, yes, Google gets the same amount of money. But if one ad got those 100 clicks in 1000 impressions and the other in 2000, the first per 1000 impression makes them more money. By definition, the first has better quality and even though both generate the same amount per click, the better quality ad generates more money per impression. That's what Google is concerned about, not that they make the same per click.

>> You are saying that "Goog's" fishing nets work better, and that "you" can get folks a better deal on "Goog's" fishing nets for them, than if they went to "Goog" themselves..that is "your" business model.

Yes, that's what I promise: build a better campaign (a better net) and reduced costs. Note that I don't push just Google, I'll do the same with any PPC out there. They all work on the same principles by the way. That should tell you something. Overture went from a highest bidder wins to Google's model. I can't think of any with a highest bidder wins model anymore.

I've just read the link you provided. Thanks for that. Always interesting to read other opinions.

One comment about it. Agree with Google rankings can make or break a business. True. If you rely only on search and I agree it's scary the number of businesses that are reliant ONLY on search. But you shouldn't rely only on search, natural or paid traffic. There are other ways to promote your business, other online methods as well as offline.

The part about the 2006 AOL search data is very familiar to me. I have that data on my computer and have analysed it. When you do a proper analysis on data and remove the fluff, it's amazing what you find. That 42.1% click rate on first position quoted and often repeated is completely wrong. It's more like 25%. I do have a document about this myself on my site but I can't link here. I could email it to you if you're interested.

Anyway, good luck in your venture.

[Leosghost]

You also must have photographic memory..

I do..:) Goes with my original profession / talents ..

Anyway, good luck in your venture.

And good luck to you too, although as we both know , luck counts for very little, very rarely , most of it is working harder, or smarter, than the next person..I suspect we both do :)

When you look at it that way, yes, Google gets the same amount of money. But if one ad got those 100 clicks in 1000 impressions and the other in 2000, the first per 1000 impression makes them more money. By definition, the first has better quality and even though both generate the same amount per click, the better quality ad generates more money per impression.

This I agree with...good "copy" receives far more clicks than bad copy, I used to also write "copy", began decades before Google and websites existed.."Good copy" could make an ad campaign on multiple medias work if the client spend was 10 million "spread".."Bad copy" could mean that it was wasted for all except branding ( and some "bad copy" can even harm the "brand" ) ..

My problem with G QS is that it doesn't promote "Good copy" over "deceptive copy"..it allows "deceptive copy" to flourish, as long as the "copywriter" is willing to pay a premium..

The "Good copy" can, and may "win out" over time, but in some niche(s) the time is so long, that the "good copy" is better used in the "organic" as any company with deep enough pockets can keep it down ( if they wish to "loss lead" ) with "bad copy" or especially "deceptive copy" in adwords..

The customer only knows if that ad was a good quality ad when they have already clicked through..some then spend many minutes on the site, searching in vain for what was advertised "deceptively"..they do not always "click back to SERPS" immediately..they may even make a "compensatory purchase"..to G..that looks like "satisfied client"..and thus good QS..

[idolw]

Adwords is becoming TV or organic SERPs. In the long run, only big brands will be able to rank for big keywords just like only big brands do national TV ads or rank for best keywords in organic SERPs.
Also, I believe Google will be going towards limiting the best ad space to limit the inventory and allow the market to increase price bids. As of now you have 11 ads fighting for one click. Let's assume all 11 ads bid $1 per click. If results are good and user only clicks one ad, Google makes $1 for this search. But what will happen if there were only 6 spots available and 11 competing advertisers? The CPC will go up as everyone wants to be on the page. It will still be possible to show on Page2 with $1 bid but we all know there is no traffic on Page2.
We already see this when we look at Top ads vs. Side ads traffic stats. My ads placed at the top have CTRs of at least 10-15% while the first ad on the side bar is lucky when it gets 4% CTR. So the fight for the top spot drives the price up. Luckily side ads still drive some traffic and if you have lots of products/services you can still get your scale with side ads. But what if they remove side ads due to increased mobile usage, etc.?

[jimbanks]

It's really simple, most advertisers are idiots that don't understand the tools they have available to them, how to use them and they spend far too much time analysing things they can't control.

If you feel you've hit saturation point on your campaign focus on making your site load faster, focus on making your landing pages convert better, focus on making your checkout process slicker, focus on getting better lifetime value from people you work with, focus on extracting financial value from people that don't buy from you, get them signed up for a list, focus on thinking outside the box of ways in which you can get people into your funnel, focus on other channels to complement your Adwords campaign, focus on your competitors stupidity, see how they bid, when they bid and formulate your strategy around the gaps they leave, focus on becoming a numbers nerd, focus on setting up a number of relevant events and goals, small and big goals, start working towards improving those.

Don't blame Google, they are not the people pushing the prices of your keywords up, they are providing the platform.

None of us would have jobs were it not for this eco-system, think outside the box..... In the days when Google didn't allow advertising for gambling (in the UK here) we were doing decent numbers of sales for a client because we thought outside the box, we thought trojan horse, we thought display ads, we thought really cheap keywords, we thought page impressions, but all the thinking was different to the norm, we zigged while everyone else zagged.

Look back to when DKI (dynamic keyword insertion) became known of. For 3-6 months if you knew about it, you dominated your space, your ads were so much more relevant to the searcher, they repeated what they typed back to them and it was in BOLD. Then everyone found out about it and you had 10 results all with the same title or the same words in the description, so we switched back to NOT doing DKI and got 3-6 months of killing it again because the ads were different.

Tomorrow there is a new coming of the Doubleclick Ad Planner, showing results from the 2 million odd content network publishers "only", that works for me. Retargeting, social links, Plus 1, sitelinks, reviews.

Honestly, I go back to my original point, most advertisers are idioits. Don't be "that advertiser".

[RhinoFish]

And don't buy into conspiracy theories, they undermine your fortitude. Numbers not beliefs.

[Leosghost]

None of us would have jobs were it not for this eco-system

Some of us would ;)..But this can be fun,( sometimes ;) and interesting,( sometimes ;) and an additional income source..

[jimbanks]

PPC advertising is where Google make all their money. Were it not for this, Google would be a garage experiment, maybe Yahoo would still be the king of the hill, might even be Alta Vista.

Ironically, back a while I heard of a bunch of competitors getting together to try to fix the prices so they were not too high and the PPC provider spoke to the "groups" as they were effectively breaching the terms and conditions by fixing the bid prices outside of the auction.

It's a complex pricing model, agreed, but don't be silly and pay more than you have to and then complain that the prices are too high.

[rankmaster77]

jimbanks, I appreciate the comments, but you are really way off in your assessment and you've generalized, just as RhinoFish has.

Fact: You can build a tremendous PPC account but because "the idiots" are allowed to bid, they will not only increase your costs, but everyone else involved. Therefore is it the "idiot" or the platform that is geared to not direct "the idiot" in the right manner and at the same time penalizes the "advertiser" that does have his/her act together?

There are some that may not want to admit this-but how many agencies have had to have "that" tough conversation (after many adjustments and tweaks are made to an account to compensate for shrinking margins) and advise a merchant that the CPC is going up? Lets be truthful here, please!

[jimbanks]

Google have never made much effort to try to drive the CPC down.

I've not generalized, in most industries there are a few that get it, and I would say if you've been getting the results and growth for two years then you understand the model.

I am not altogether sure the correlation between your success with the campaign and the competitive landscape of the sector.

The model changes, all the time. Tomorrow is the launch of the Google Display Network Planner, which is replacing the Doubleclick Planner, but when you speak to a lot of advertisers they don't know the difference between search and contextual, mobile and video, they lump everything together in the way Google does it "out of the box", so the chances of them understanding how to plan and buy contextual media just isn't happening.

This is Webmaster World, we can't really talk about specifics in the forum.

As an agency, you are not doing your job if you don't have that conversation, often. Looking at the competitive landscape is an integral part of the job. If you are not able to make the pricing stick at the higher levels, chances are competitors won't be able to do so either.

That's why I said in this instance it's better to work on the things you can control, site speed etc. and let the "idiots" fall over themselves.

I hope you didn't think I was implying that you were in that category, clearly two years of success/growth tells me you are not.

My model is pure performance, so if I don't tell them things are changing, none of us are making any cash.

[rankmaster77]

Got it Jimbanks. Thanks