10 reasons Pay Per Click advertising doesn’t always pay

Author: James Baker

Author: James Baker

Pay Per Click advertising (PPC) has had a pretty good press these last few years. Google has become one of the worlds most admired companies on the back of its sponsored search and Adwords revenues. Fees earned from visitors clicking through ads on their sites has become the most important revenue source for many content providers, including giants like Facebook and Youtube. Armies of individuals have created content (like this article) in the hope of taking a tiny slice of the huge PPC pie, which is estimated to reach $60 billion globally in 2010. But does this burgeoning PPC spend really pay for the advertisers? The short answer has to be yes because such growth would not have occurred without the bulk of the spending generating profitable results. However if you're planning to spend on PPC perhaps you might want to look at some potential downsides: 1. Variable and skewed traffic Most people never click on internet ads. Estimates vary but it seems that 70-85% rarely if ever respond to internet advertising so the traffic you do receive from PPC is obviously skewed to a certain segment of the population. This may not matter if you are getting profitable sales from acceptably priced traffic but it is at least worth considering if you find that you are attracting the wrong kind of visitor (such as non-buying ones) to your site. It is also an argument for not putting all your eggs in the PPC basket as you are missing the bulk of your potential market. 2. Brand and credibility issues Being no 1 on Google carries a certain cache, though it does not take an internet marketer to know there is a big difference between being top for a competitive term (restaurant New York) and an obscure one (Bulgarian restaurant New York). But by the same token, it is also true that paying to put your name, brand or site in front of internet eyeballs can sometimes look like an admission of failure or, worse, spammy and amateurish. If you begin an Adwords campaign for your blue chip investment advisory service do you want to end up just below an ad touting 1000% returns for penny stock tips? 3. What about nonliners? If you spend a large amount of your marketing budget on PPC you are missing a large part of your potential audience. We have already talked about the majority of surfers who do not click on paid results or banners, but what about nonliners who do not use the internet or do so but not when searching for your product or service? At least if your internet marketing strategy is mainly organic (non-paid) then you may have money left over for offline marketing. 4. Failure to convert If you think PPC is a lazy and easy way to make money online then you can forget it. Anyone in the industry will tell you that attracting traffic is only part of the battle; you can quickly lose a lot of money paying for clicks through to bad internet sites or landing pages which do not convert clicks to profits. Try an experiment for yourself, typing in a relevant search term and clicking through the sponsored results. You will quite often be led to boring, low impact homepages with no sales pitch or call to action (in marketing speak), or pages with limited relevance to your search term or even to broken links. If you spend money on PPC you still have to invest time and thought in developing effective landing pages and arresting site content. 5. Click fraud One of the great advantages of PPC is that everyone clicking through has had their interest piqued by your ad and therefore is a potential customer. But what if you are paying for clicks made by competitors trying to undermine your campaign or online marketers generating phony clicks to make money? This is a growing problem and even though there are controls and protective measures that Google and others take, this can be an expensive pitfall for the unfortunate or unwary. 6. Bidding wars If advertising your chosen keywords is expensive or at least going up in price, this does not necessarily mean that you are getting more valuable traffic for your money. More likely it means the competition is hotting up. US car dealers faced this problem at the beginning of the recession when Americans stopped buying cars: PPC rates for key industry terms doubled and trebled as dealers scrabbled desperately for clicks.If you build your business around paying for clicks it can be very painful when those clicks suddenly double or treble in price. If the cost becomes prohibitive what do you have to fall back on? 7. Keyword research A lot of site owners are put off the alternative to PPC achieving high search engine rankings by link building, article marketing or other techniques because it sounds too much like hard work or very demanding and technically difficult. There is some truth to this it is not easy to rank well for competitive terms but given time and effort you can get there. However the alternative of PPC is also demanding because campaigns also require a lot of skill and knowledge, particularly in terms of researching keywords that are not only going to attract the right traffic but also be affordable enough to be profitable. Campaigns also require constant monitoring and adjustment to achieve goals efficiently. 8. The risks of getting PPC wrong How do you fancy getting Google Slapped? If you are new to the world of PPC you probably dont even know the term but it is about as unpleasant as it sounds. If Google doesnt like something about your Adwords campaign (most likely a lack of quality or relevance on your landing page) you can be penalised with a slap which puts up your ad costs to sometimes prohibitive amounts. Other forms of PPC, like paid search, can be fraught with risk too, if you are unskilled or inexperienced. For example say you bid for a search phrase that you already rank well for in regular organic results. This may not be disastrous and in fact research shows that sites that show in both sponsored and regular search results do particularly well, but if you do so unwittingly you may end up misdirecting your resources, undermining your non-paid (organic) internet marketing and overestimating the benefits of your PPC spend. 9. The sugar rush problem An Adwords consultant once described PPC to me as like a sugar rush. He meant that the effects were indeed gratifyingly instantaneous and effective but not automatically lasting. There are ways of using PPC campaigns to build lasting results (e.g. building up email lists by offering visitors a newsletter or by offering programs or content which give them an incentive to return regularly) but most often PPC buyers are left with the option of keeping paying even when click rates shoot up or lose their lifeblood of traffic. Organic traffic building takes time but when done right the results are long-lasting and in fact self-reinforcing over time. 10. Budgets become moving targets In theory PPC should be budget-friendly because you work out what sort of traffic volume you are looking for and have an idea of the cost per click but the reality is not so straightforward. For one thing until you have launched a campaign and had some experience of it you do not actually know the cost per click. Google has a Traffic Estimator which gives you a range of cost estimates for each keyword combination but one internet marketing guru I know says he has more faith in unicorns than this tool. Also as we have seen the cost of PPC can rise and fall very suddenly making a mockery of your carefully constructed marketing budget. CONCLUSION: I wrote this article to balance all the good press that PPC generally receives. There is another side to this much-lauded and still fast-growing marketing tool which is worthy of consideration. However I do not mean to say that you should never use paid search, banner ads, Adwords and the rest it as part of your marketing effort just be aware of the limitations of PPC and use it as part of a multi-faceted approach. The author is based in Spain and has written this guide to marketing for Spanish small businesses: and author of the guide to marketing in Spain http://www.advoco.es/home/22-latest/32-30-or-so-ways-to-market-a-business-in-spain.htmlAbout the Author:

James Baker is a UK-qualified Chartered Accountant with over 20 years business experience in London and Spain. He is Senior partner of Advoco, Spanish law & accounting. Website: http://www.advoco.es

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