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Adwords - A race to the bottom?


#1

I’ve been using Google Adwords now for a number of different ventures since early 2004. I just wanted to share my experience on how Adwords has changed over the years, unfortunately (and this is just my opinion) not for the better, unless you’re a Google shareholder. I’d also love to hear what other bootstrappers out there think about Adwords?

For Google it seems Adwords is practically a license to print money. I’m considered a small advertiser but can easily burn through £100 a day. What Adwords does to great effect is tap into the competitiveness amongst advertisers to outbid one another until they are basically paying all their profit margin to Google, and some. But obviously you cannot blame Google for that and any levelheaded entrepreneur should be carefully tracking conversions and ROI. What I suspect is many people don’t, and the lure of turning on the Google taps and drenching your website in unfettered traffic is just too much.

I remember back in 2005, 2006 some of the keywords were floating around the £1 mark in my industry, now they are somewhere close to £6. Given that the entry level product I sell would typically yield a margin of £3, you really need to make sure you’re upselling to most clients.

What’s also interesting is how back in 2005 I might get a call from Google once a year, now it’s more like once every couple of months. Google have built a very sophisticated operation in the Republic of Ireland that closely monitor all accounts and “touch base” far too many times for my liking. Mostly these calls are related to account optimisations and fiddling around the edges, I rarely have time for this and when I have in the past it has turned out to be completely fruitless. In fact only 2 years ago one of the account specialists quietly turned on content advertising (the one where you’re ads appears on other websites, I.e. much less targeted) on a large campaign that subsequently burned through £8,000 in 2 months and resulted in a handful of clicks and 0 conversations. After taking this matter as high as I could with Google I got back £4,000, although I had to take my case to the UK CEO as Google Ireland practically stone-walled me.

So if a Google specialists has made some alterations to your account, make sure you go over and fully understand every minute change, as they can have quite profound effects. And of course my failure here was to not keep very close tabs on what was going on in my Adwords account in the following days, had I logged in I would have noticed this much earlier. My excuse as I am sure others here may sympathise with is trying to cover too many roles and allocating each an insufficient amount of attention.

Well this turned into a bid of a rant, which was not my intention. I would not discourage anyone from using Adwords but for what it’s worth these are the key things to be mindful of (feel free to add to this):

  • Put in place a very strict budget and extend this only when the data supports this, and it is commercially viable to do so.
  • Use the conversion tracking code (without this you really can’t get any sort of reliable ROI).
  • A, B test your ad copy and landing pages (this unfortunately is quite involving but will allow you to get the most from Adwords).
  • Do not follow these automated wizards (I think Google refer them to “Opportunities”) that create ads in your account automatically for you.
  • Display advertising and content advertising for me at least were a complete waste of money. They are not well suited for bootstrappers but rather for big VC backed enterprises with deep pockets.
  • Be very wary of these calls from Google account specialists. They have a vested interest in getting you to increase your ad spend and logging into your account more frequently to check on your ad positions. If they make any changes get them in writing and very carefully check and understand the consequences.

As I mentioned, I would be very interested to hear other peoples experience with Adwords.


#2

If you ever read the Ultimate Guide to AdWords by Perry Marshall he goes one step further and suggests that you never allow a Google specialist anywhere near your AdWords account.


#3

@CoWiz I pretty much concur with everything you said. I have been advertising since 2005, although it looks like a spend a lot less per month than you do.

My 10th anniversary present from Google Adwords was a vague email that they have suspended my Adwords account. On further enquiry they told me that I am not allowed to hyperlink from http://www.perfecttableplan.com/ to any other domain.

I’ll pause a second to let that sink in…

Obviously ludicrous and not what it says in their policy documents. I am currently trying to get this reversed and will post on http://www.successfulsoftware.net about the whole sorry story when I do.

I wouldn’t trust a Google employee make changes to my account. Their motivation is to spend more, mine is to spend less.


#4

First post in Boostrapped.fm! Looks like a great community.

Full disclosure: I run kudu.io

I agree with a lot of the points.

Here’s some notes I’ve taken from your post with my thoughts added:

  1. It’s easy to waste a lot of money on AdWords

Yep!

  1. It was easier 10 years ago when it was less competitive

Totally

  1. The ‘Google Specialists’ (These are Google staff based in Ireland) who proactively reach out to help with your account can offer very poor advice.

Totally agree. I had first hand experience of this years ago. In my case, the Google Specialist mis-spelt ad copy and added unrelated keywords to my campaigns. Google gets paid when your campaigns gets clicks. So this team are there to get you more clicks. This doesn’t necessarily mean you’ll get a well performing campaign. I wouldn’t advise anyone to use them TBH.

Take aways:

  1. Start with a budget you’re happy to test with and grow from there when you have proven results.

2 We’re not privileged enough to run campaigns in a non-competitive market anymore so we need to ensure the campaigns are ran professionally with constant tests. This goes for any online advertising.

3 Be wary of a free account management service


#5

That’s crazy, Andy! The first time I’ve heard that one!


#6

The changes made to my account were allegedly based on a verbal agreement, I’m not sure if they still do this but I really hope not! I repeatedly asked for a recording of this agreement and they were unable to produce anything, nor were they willing to discuss the matter any further. It took me a long time to get any sort of compensation and the whole thing changed my opinion of Google in a big way.

As @Andy mentions there is a huge conflict of interest in dealing directly with these Adwords specialists, when they’re fiddling around in your account it’s a recipe for disaster!


#7

@CoWiz That sucks, I’ve not heard any good things about the service.


#8

My main issue is I can’t accurately track ROI. I’m selling B2B software and in most cases person who purchases is not the same as person who clicked on an add. My best guess is to track how it converts to downloads and forget about ecommerce part. On positive side my niche doesn’t have that much traffic so I can’t spend too much anyway.

What I noticed over the years is that bid price just rises, even if there’s no competition! I’m in very small niche, I have just 2-3 competitors and they’re mostly just hibernating so I think they’re not spending much money or any at all on adwords. And yet, bid prices constantly go up and every now and then some of keywords are “not eligible for first page”. And there couldn’t possible be more than 3-4 ads for these keywords.

Maybe I’m wrong about that? Is there an easy way to see which adds are displayed for major markets like USA, without dealing with VPN or proxy? Maybe my competitors are more active than I think, but I don’t see it if they’re turned off my country from targeting.


#9

Adwords are doing everything they can to encourage bid price inflation. And its working:


Also more competition=higher bids.

I have also had keywords where there is no-one else bidding, but they still won’t show your ad until you bid ‘enough’. So its not a pure auction.

Tracking conversions is problematic even for B2C now, because many people use multiple devices.

IIRC there is a way to see the search results for particular countries. Its somewhere in the sprawling Adwords UI. I forget where though. Try looking under the ‘tools’ menu.


#10

The degree of trust you must place in Google is significant. Given their technical expertise and immense resources it would be trivial for them to engage in some very subtle tactics to inflate bid prices.

Here are a few of the points you must trust Google on:

  • To effectively and rigorously filter out click fraud. With these massive Chinese botnets this is getting harder and harder to do.
  • To not manipulate organic search results based on yours or your competitors Adwords presence. I.e. demoting you organically if you reduce your Adwords spend or eliminate altogether. By the way I’m in no way implying that they do this and strongly suspect they don’t but nonetheless it does require trust.
  • To not artificial apply floors in bid pricing, as others have suggest, no competition yet inflated min bid prices.

Also Adwords has become so complex to manage that they’ve started to dumb it down with all these automated wizards that dump a ton of broad match keywords into your account. I suspect a lot of noobs are using these and further inflating bid prices.

Adwords is looking more and more like a Casino to me and unless you handcraft all your ad groups manually, only use exact match keywords and track everything it’s probably not worth it for your average bootstrapper.


#11

It is following ‘the law of shitty clickthrus’:
http://andrewchen.co/the-law-of-shitty-clickthroughs/


#12

Great writeup with historical data @Andy–thanks for sharing. Are you trying alternate channels like FB and Twitter ads and how do they compare? Are you finding flat, increasing or declining ROI in those spaces?


#13

I wrote up my crazy experience getting my account suspended for daring to have a link to another domain.


They are so big, I’m sure they don’t care what I think. But maybe they’ll notice if it gets some wider coverage, e.g. on HN (easier said than done).


#14

That’s an interesting read, thanks for posting.

This is a complete overreach by Google, I didn’t realise what a bureaucracy they’ve become.

Also note the patronizing "Thanks for writing in, hope you are doing great."… and we’ve just disabled all your ads and created a major headache for you but “Have a great day ahead.:smile:


#15

I hate that sort of insincerity. It just rubs salt into the wound.


#16

My post has made it to the front page of HN. So maybe (just maybe) someone at Google will take notice.

Google is the new Microsoft!
http://www.forbes.com/sites/gordonkelly/2015/02/18/microsoft-google-swap/


#17

I’ve been going through our adwords spent over the last three years for our app www.staffsquared.com (B2B HR Software) and the results were, startling.

Basically we’re starting to the feel the same way as you good people. There’s too much “behind the scenes magic” that goes on with Adwords. For example, I don’t believe for a second that all of the clicks that we receive are legit, in fact I know that they’re not but we don’t get credited for them.

The kicker is that our competitors throw money at PPC creating a race to the bottom (or top of the search results!).

My advice to anybody who spends a significant (more than four figures plus per month) amount of money on Adwords is that they rigorously test the ROI on that spend. So for us, we track the number of trial sign ups we receive from Adwords, and more importantly the number of trial to paying customers! I also totally agree with not letting Google reps play with your account, nor should you take advantage of the “opportunities” that Adwords presents.

Ultimately Adwords is just one marketing channel that we use to reach new customers. If it doesn’t continue to deliver enough value we’ll happily drop it in favour of other channels that do. This allows us to have a much healthier relationship with Google :slight_smile:


#18

Theoretically, that means you’ve now entered a ticket into the Google Customer Support system. LOL


#19

Just read interesting article about AdWords:

https://blog.kissmetrics.com/brilliant-adwords-features/

Main takeway for me was point 4 - apparently AdWords can automatically build image adds for you. Just point it to some page on your site, it scans images and auto creates several variations of ad which you can further tweak. I never used that type of adds since I assumed I’ll have to work with graphics designer to make it work. Now it’s easy and fast and I can spend (waste?) some more money with them. Oh well. Remarketing, here I come!

Edit: it also mentions that you can see your competitors for certain ad or keyword (point 3). However that list is empty for me. Could be that my hibernating competitors don’t use AdWords at all, which makes really interesting case for “raise your bid to be on first page” bid inflation. Can anyone see their competitors there?


#20

Last 15 years in the search marketing arena have left me to conclude sort of the same.

The CAC for generic (non-branded) search terms are going up.

Some thoughts on how to keep this channel profitable:

  • be sure to measure your LTV and Adwords Converions as good as possible
  • think twice about conversions attribution modeling (does last click attributon work best for you?)
  • take total cost of adwords into account (adspend + cost managing the channel) and compute Avg CAC.
  • in highly competitive markets, start with exact match keywords on buyer terms. In AIDA language: the Action keywords like ‘buy canvas print online’

After some initial optimizations: if LTV > Avg CAC then Adwords might still be worth looking into.
Only then start broadening your keywords.

Don’t be depending on Google (Adwords or SEO for that matter), there might still be people in there who believe thay are not evil, but as a company i’m not sure…