Season’s Greetings from Google – what an insult!December 17, 2010 9:26 am Google Adwords
Today Google emailed out their PPC advertisers to thank them for using PPC, which has enabled Google to contribute $20 million to charitable organisations around the world. They also give a link to a YouTube video that explains how the money will help.
Aaaaaaahhhhhh, that’s nice.
Or is it?
While no-one can say that $20 million is not a good gesture, it’s worth putting those figures into a bigger perspective.
In 2009, Google’s revenues were $23.6 billion. Based on current figures, 2010 looks like hitting about $28 billion. Doing quick sums shows us that the $20 million charitable donation works out at about 0.07% of total revenues. Not exactly a huge percentage is it? If Custwin was to make that same percentage donation it would come to under £100. Hang on, if we multiplied it up by, say, 7 times, we’d be donating 0.5% of our revenues – that would make us (proportionally) so much more generous than Google!
I’m being flippant of course but the first point is that $20 million is a microscopic amount of money compared to what Google bring in.
The second point is about the flip side of the coin. The organisations benefiting from the Google donation will, I’m sure, be grateful. But perhaps charity should begin at home, with the advertisers who buy Adwords clicks. It’s becoming increasingly the case that PPC clicks are getting costlier – there are many reasons for this but one big reason is that the Google system actively stops advertisers from using the system in a way that would be fully beneficial for them. Here are just two examples ..
If people set up PPC in the way that the system will allow them to do (by default) then they will lose money hand over fist – guaranteed. It is so easy to prove that broad match PPC advertising is wasteful on advertisers budget and yet Google don’t go out of their way to encourage advertisers to use the system more effectively. It’s much easier (and profitable) to let advertisers make costly mistakes. Contact us if you need any examples to show you why broad match in PPC is a disaster zone.
If you’re an advertiser who wants to be visible under a phrase such as ‘red widgets with blue stripes’ the Google system won’t allow that because it’s considered ‘too niche’. As an advertiser, you may not care that relatively few people type that phrase, but you still want the option to be highly visible when people do type it. Instead, you would be allowed to advertise under the phrase ‘red widgets’ and to do that, would have to offer higher click costs because of the levels of competition for that phrase.
The fundamental flaw in the Google system is that it forces people down a path of having to use more generic keyword phrases, which gets expensive as there’ll be more competition bidding on those phrases. What it should do is recognise that there’s a strong link between what the person searches for and what an advertiser has as a keyword phrase. Taking the red widgets example …
If someone types ‘red widgets with blue stripes’ then they have a need for that type of widget. They would much rather see an advert appear that refers to what they need, rather than a load of adverts for red widgets or other widgets. In theory, Google should allow such keyword phrases and if someone types them it matches up with the most specific advertiser, not the advertiser who is prepared to offer the most cost per click. The searcher gets what they were looking for and so are more likely to click on future PPC adverts. The company gets a click to their site that hasn’t cost them a fortune.
Google give many (pathetic) reasons why they won’t allow advertisers to use niche phrases – none of them have any real credibility. The only real reason is that they realise they can make more money from getting advertisers to compete against each other (for more generic keyword phrases) to have higher positioning. But it’s very short-sighted and dumb for Google to look at their revenue stream in that way. Small companies dominate the world but they don’t have huge budgets for clicks. Thousands (probably millions) of small companies won’t use PPC (or have tried it and it’s not worked for them) because of the costs. If Google allowed advertisers to use more niche phrases, and as long as those adverts got a reasonable level of clicks compared to searches, then everyone should be happy. Google would be especially happy because revenues would increase massively as smaller businesses suddenly found that the system works for them.
The end result of all this? Searchers find the PPC results to be so much more useful (by getting niche results appear for their niche search phrases). Advertisers gain better quality traffic and enquiries/business as a result. Google make a lot more money because small businesses feel there’s good reason to advertise and it’s going to be cost-effective.
What would Google do with that increase in revenues? Hey, they could increase their percentage of charitable donation. But I doubt that would happen. Think more of what impact the smaller businesses could have if the PPC system was friendlier to them – increases in business leads to increases in revenues and the positive knock-on effects from that would be huge. There’s constant talk about recession and companies not doing well – show me a PPC campaign and I’ll show you where the wastage is and my finger will be pointing at Google for allowing companies to waste money and make mistakes through their PPC advertising.
$20 million donation from Google? Pah, what an insult! They make more money than that in a single day of wasted clicks from advertisers being led down a path of advertising inefficiently.