Category: Google AdWords

On the Google AdWords blog this past week, Google announced that it was dropping its pay per action program.  If you never used pay per action, here it is in a nutshell.

With pay per action, you decide what you will pay, amount and action – you cannot do an action for a sale if you do not have access to your shopping cart code. Then publishers can pick up your code to show ads on their sites and can get paid when the action happens.

I found from using the program for a client, that pay per action was just not embraced by the publishing network. If you were only offering under 1 dollar or so for the action, publishers did not pick you up. Publisher came and went and so the ads were on and off again.

Although it sounded like a good idea, publishers really want to be paid for clicks as it simply was easier money.

I would not have believed this if I did not manage so many accounts, but in week three of June, that is 6/15 to 6/21, nearly all businesses (nearly 40 AdWords accounts) crashed in regards to the number of impressions on Google AdWords. In fact, the problem has impacted so many accounts in such a big way that June is sure to be considered a poor month when tracking results in the long run.

When reviewing the statistical data of a conglomeration of accounts, impressions and also clicks dropped from a whooping 75% on some accounts to 15% on others with an average decrease expected by month end of around 20% to 33%. Google will really have to serve ads strongly this next week in order to pocket their full 30 day click budget.

As a result we have started to see some accounts be served way, way, over their daily budget, even more than the stated and authorized 10% over per day by Google to make up for the third week’s loss. One account we manage with a $9 a day click budget yesterday had a $20 spend. According to Google’s policies, they can only spend 10% more than the daily budget in a period of several days, but with really bad results in traffic this last week, I am sure that we will see particularly strong impression and click activity to help Google end the month back on schedule.

This does not let Google raise prices for advertisers. Google does not set the prices manually for ads; rather, advertisers themselves determine prices through an ongoing competitive auction. We have found over years of research that an auction is by far the most efficient way to price search advertising and have no intention of changing that.

Just how is Google making so much money from Google AdWords? Well based on the comment taken from this Google blog post speaking about Google now showing ads on the Yahoo network, it is the advertisers who are soaking themselves not Google.

Yes that’s right, but escalating prices in your own industry in an effort to own the number one spot for your ad by price and not by quality advertisers are jacking up the prices on themselves. According to this quote by Google, we have no one to blame but ourselves!

If you understand the supply and demand curve, this is economics in action. If people decide to pay less, prices will decrease due to a lower demand and the cost per click will drop. What I have found is that in some cases dropping the cost per click will actually generate more impressions and clicks and not significantly hurt the page position in the Google AdWords advertising results. This tactic has crashed some accounts in very competitive large metro markets, but is a workable approach for many. So take a stand and decide to pay less for Google AdWords, what you pay now impacts what Google charges. They didn’t make billions last quarter for nothing!