Wednesday, December 16, 2009

Three Months With Google AdWords

We recently changed our business plan and embraced online selling. We were obviously aware it existed before, we just didn't have anything that you could effectively sell in that way. Online selling means online advertising, and we all know that means Google. This gave us our first look at AdWords - Google's advertising OS - and we were impressed, but we soon discovered some unexpected things that you might find interesting.

The Anatomy of Google AdWords

AdWords has two distinct channels: search and content network. Search is the "Sponsored Links" section that you see at the side and top of search results. Content network is everywhere else that Google puts adverts, which is principally the AdSense network and GMail. By default, adverts are delivered across all channels and there are numerous analyses for seeing how they perform. We have been advertising with a very modest budget to a niche market for three months, but in that time we have had some eye-opening experiences.

AdWords is Expensive

You don't pay when Google shows an advert, only when someone clicks on it (a click-through). However, a click-through from the search page costs us £2.50 and from the content network it is about 80p. I assumed it would be much less than this, but then I have led a sheltered life. I am not saying it is not worth the money; it just costs more than I expected.

You Are Google's Bitch

As an online business, we rely on people being able to find us online (duh!). Either they are looking for us explicitly or are looking for the type of thing we sell. 70% of people will do this using Google's organic search, so if Google decide your site is suspect or undesirable in some way and decide to de-list you, your market just got a whole lot smaller. There is no discussion process, no independent authority to whom you can appeal, no cost to Google, and no way back. Sites can be demoted or completely blocked erroneously and without warning or explanation just for something as simple as putting light text on a light background (because it looks like you are trying to fool the GoogleBot into promoting your search rank). This is a dangerous monopoly and it needs to be addressed, and I had never really thought about it before, but it is not my central thesis today.

AdSense is Suspect

In the first week, most of our spending was going into the AdSense network, but when we looked at the target sites were disappointed by the placement choices. More seriously than that, we found strong evidence of click fraud. I don't want to divert from my central thesis at this point (it's coming I promise), so this will be the subject of my next posting. I only raise the point now to say that we suspended AdSense adverts, so all "content network" placements were on GMail only.

Search is Irrelevant

Here is the really interesting thing: In the three months we have been advertising we have had 20,000 impressions on the search pages but 1,000,000 impressions on GMail. Just 2% of the eye-time that we bought from Google came from search.

Assuming our figures are typical (and this is by no means certain given the niche nature of our business) it begs the question: why does Google stay in the search game? The most obvious answer is that people think, as we did, that search engines are the primary online advertising platform, so they take their marketing dollars to Google, only to have Google spend them elsewhere. Therefore, Google must maintain their dominance in the search game or companies will move their budgets elsewhere based on the incorrect assumption that less people would see their adverts.

Google is Vulnerable

It also implies Google is vulnerable. Ignoring AdSense for a moment (which is risky, but work with me here), GMail is not the biggest WebMail provider by a long chalk. Plucking the first numbers I could find off the web I see that GMail has about 90m users compared to Microsoft and Yahoo's 250m apiece (see why Yahoo is still a valuable asset now?).

It appears to me that in taking Google on at search, Microsoft and Yahoo are charging at the cape rather than the bull. Show people that you are the advertising channels of choice and hit Google where it hurts.

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