I’m sorry, but they are. They are losing out, we are losing out, and the customers are losing out. Google’s doing alright out of it, but then they always seem to!
Here’s what’s happening. Picture the scene , a big company decides it’s time to advertise on Google, so they call up their analytical people, and ask them to make it happen. Perhaps they call a few PPC agencies to get some quotes, perhaps they don’t, but either way, they decide to do it themselves (how hard can it be?). They read up on Adwords, maybe even do the Google exam (or maybe not) and launch themselves into it. So what happens next? They work out how much they have to bid to get to the top of the search, and bid that. Maybe they get their wordy people to write some adverts, and away they go. Needless to say, they are losing money more often than not. But why should the rest of us care? They’ve got plenty of cash, and if they want to give it away, let them. Maybe this was true in the past with poor advertising campaigns , after all, if a big retailer puts a bad advert on the TV, or in a magazine, it doesn’t affect anyone else. But this is PPC , and the whole concept is based around an auction. If you’re paying £0.50 per click, and appearing fourth, then somebody else appears and pays £5 per click to appear first, you’ll drop down to fifth. And get less clicks. And make less money. And if you’re an agency, working on behalf of a client, all they know is that they are getting less traffic, making less money and their rival is top of the pile , try explaining to them that you know what you’re doing and the competition don’t. Suddenly everyone’s under pressure to increase their bids or lose traffic , and every time somebody increases their bids, they make the whole problem worse. It’s called inflation, and as long as there are have-a-go companies jumping onto the PPC bandwagon, it’s here to stay. The solution? There isn’t one, really. You do the maths, and stick to your sweet spot, and accept that your campaign has just become less profitable. Now imagine if you will, a world where everyone does the maths or hires a good agency to do the sums for them (and, believe it or not, most agencies don’t bother, they just guess). Suddenly, everyone is paying according to their site’s conversion rate , the more likely your clicks are to convert, the more you can afford to pay. So the sites that most closely match customer requirements win, and the ones that don’t, lose. The customer is happy as they are finding what they want, Google is happy, because it delivers relevant results, agencies are happy, because they can compete, not with unlimited budgets and silly bids, but by optimising the campaigns better. Everyone wins, except the people with poor websites or uncompetitive prices. Will this ever happen, or is this just a dream? I’d like to think that one day it’ll happen. Google are trying to make it clearer how the whole thing works (whilst not leaving their processes open to abuse), and over time, I think that people will learn to use this new medium. But it won’t be soon. There are still agencies out there that take the money and do nothing in return, and agencies that simply don’t understand well enough how to make campaigns truly successful. So, for the time being at least, we’ll just have to keep explaining to customers why, contrary to intuition, top of the table is not the best place to be.