anyone else noticed costs rising and roi dropping this year?

travel

[jamie]

we've always used adwords and closely watched roi. however this year (travel), we have been unable to see any profit this january, to the extent where we have currently paused all ads.

we know what the margins are, so if we aren't profitable, i am pretty sure the ones paying more aren't - is it just buying eyeballs?

certainly the companies prepared to pay more are much bigger than us. this is a trend we have seen every year, but it seems 2008 is the biggest price hike by far.

perhaps it is just january ad blitz. we are going to retry in a few weeks.

anyone else care to share?

[shorebreak]

My former employer - Efficient Frontier - put out a study yesterday comparing Q4 '07 to Q4 '06 across the 3 major SE's and looked at both spend growth (29% Y/Y) and ROI growth (13% Y/Y). That's across ~$500M in annual spend and I take it to mean that spend is growing far, far faster than ROI at this point.

You can find the study on EF's blog.

[watchthis]

Its a trend in every niche, not just travel. As more and more advertisers sign up, which is happening in droves, there are more people bidding and bids are driven up. Also it would have always have been slower in January as most people have spent a lot during christmas and the new year and are generally rebuilding their bank rolls at this time of year.

Only advice I can give:
Increasing your CTR on Adwords will decrease your CPC and should help out with ROI as a result.

Untill then, good luck and if you do retry towards the start of March, please keep us updated.