Pay Per Click Conundrum - Google the cash hole ?
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by: TrevorWeir
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Word Count: 550
Every month some prognosticator predicts yet again the demise of Google. It seems like a repeat of when they used to say the same about apple. So why would anyone make a statement like this : Pay per click Advertising in Google is Dead!
In truth, nothing could be further from the truth. Pay per click advertising with google adwords is roaring ahead, much to the chagrin of ask, MSN and the number 2 giant Yahoo. So, if this is truly the case, why how could there be any truth in this unsubstantiated rumor?
What is great for Google is always great for its customers too, right? Well it might be, but it's not the customers feeling the pinch here, it's the advertisers like you and me. Google's adword system is based on a set of "highest bidder" algorithms.
If you normally have 1200 potential buyers at your saturday afternoon car auction then one bright saturday afternoon 40 additional bus loads of happy go lucky gamblers stop by on their way to the casino, do you think that your cars going to be auctioned for higher or lower prices?
Perhaps the rumor of the demise of Pay Per Click really applies to the only group actually hurt by Google's increasing ad revenue stream - those that find themselves with twice as many angry competitors bidding for the same keywords.
The death of adwords right? Does it make more sense now? The tool becomes less and less useful to you as the price per click skyrockets.
So, now you understand what we mean by the death of pay per click? When there are too many bidders bidding for the same set of keywords, the price is going to go up. Some of the bidders will have deep pockets and nothing else.
Rich gamblers getting off the bus and bidding on the dream car you have been waiting months to see roll down the auction line is going to make you real happy right?
Would you pay 9 dollars for the keyword phrase "Internet marketing"? Most of us would say this is a little pricey. A hundred clicks later, and you are almost at a thousand dollars. With a 3% conversion rate, you would need to be selling a product for 600 dollars at 50% margin just to get close to break even.
Not funny right? But this scenario is being played out all over the pay per click world all day long.
Suppose I told you that while a few of us having been noticing this trend lately, that a few guys have been taking action. A few weeks ago, while consulting for a real estate friend, Randy, I noticed that over 40 real estate brokers were bidding in Google for 3 key phrases and almost no one in Yahoo.
By the end of the week, my Google adwords account had recorded just less than 10,000 impressions on just 4 popular search terms. My Yahoo Search marketing account had barely cleared a thousand.
Not only did the competing real estate agents bid the Google prices above the dollar mark, but they also clicked on each others ads by the thousands. I know this because several of them filled in my form after clicking on my ads too. In the meantime, my Yahoo costs stayed serenely under 15 cents per click.
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