When your Google spend exceeds your net earnings

discontinue adwords, cost effectiveness of adwords

[skatingtoolman]

We have been using Google Adwords for over a decade. In our industry, we are seeing our competition increase their bids for top position. I believe this is due to lackluster sales, therefore everyone in our industry has decided to buy that top spot.
Due to this increase in conversion cost, after deducting the cost of the product from the actual sale price, then subtracting our Google Adwords spend, this leaves us breaking even. (not taking into account labor to download these orders and ship them out)

Has anyone paused their Google Adwords for a season to see if this affects their SERPs or conversions on these SERPs? Even if Adwords is not generating positive NET income, does anyone feel that having PPC ads gives credibility to organic SERPs therefore you continue to spend money with Google due to it giving a sense of credibility to your site?

[NickMNS]

Have you tried improving ad quality by changing your ads or improving the landing page? Poor ad quality can cause you to loose an auction, despite bidding more than your competitors.

This same topic was discussed here:
[webmasterworld.com...]

And there were several good links provided to Google Adwords (Hal Varian) help video explaining the auction that might help. But in general that thread discusses your exact question.

[skatingtoolman]

Thank you. I will review the video.

[blazinec]

As @NickMNS posted, I would definitely try totally different approach to ads. In GDN, 0.1% have real impact of 20% on CPC. In Search, it is similar. Most accounts I take under management suffer the same problem - months of running a campaign without further optimization. Your competition do positive changes even when you sleep, that's the problem :( Have you tried different bids for different regions?