Monday, November 14, 2011

The Great Google PPC scam?

Does your company spend money each month on Google advertising? You know, that small little Pay-per-click campaign you started a couple of years back for a pound per month, that you now have to spend a few hundred quid a week or more on?

Well, according to one train of thought it could be costing you more than it needs to. And the company you have to blame is?.... Google.

Yes, that's right, the 'do no evil' company is possibility affecting your bottom line says Vinay Sahni:


Well, have you attended an Internet exhibition, bought an Internet industry magazine or even just purchased a business publication recently? And did a 'free Google advertising' or similar leaflet fall out of it offering you £50 or £70 of free keyword advertising?
Sahni states that this activity (e.g. giving ad vouchers to those who don't currently use PPC) is not just encouraging more people to use Google's advertising system, it is driving the price up.Yes, his theory is that the online auction of keywords is skewed when you let more people bid on the same terms and giving (potentially less-experienced) users into the system with what really is free money. Like a person who enters into an auction with someone else's wallet, the theory is that everyone else using their own money has to bid that bit more to beat them. So overall the rising tide of cost makes more money for Google at no loss.
Although a good theory, I don't actually buy this. Plus there are several possible flaws in the argument:
1. Google is actually losing money giving away vouchers (Assuming there are other bidders who are prepared to pay but were out-bid by someone with a free voucher)
2. Its not always about paying the highest price for some keywords. Often a more cost-effective campaign can be run by targetting lower positions (although you could argue that these are still more expensive with free bidders loose in the system)
3. The price of keywords will find its automatic level once the free bidders go away again (although its not often I've seen the price of keywords drop over time).
4. Sahni is forgetting Google's Quality Score weighting of PPC adverts (e.g. how well your advertising matches what users are looking for r how relevant your ad is). This secret scoring system is designed to reward PPC advertisers who take the effort to optimise their online advertising. It therefore means that those who know what they are doing don't necessarily have to bid more than those who are using a free voucher.
There's no proof that Google does NOT return the price of keywords back to the proper market price over time and indeed this would be a huge reputational and business mistake if it was ever the case.  However the fact remains that you should always monitor your PPC campaigns to ensure you are always getting the best return on your marketing spend.
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