Google PPC is a waste

What has Google done that makes it so special? They have a search engine that is arguably no better than Yahoo’s. They have maps (big deal). They have gmail–again bested by Yahoo. They have a smattering of other offerings that aren’t doing a whole lot. For some reason, Google has become the media darling of the technology industry and has a market cap many times larger than it should be as a result.

To top it all off, Google’s biggest cash cow is there PPC revenue–a cash stream that is seriously bloated because of marketers that don’t know what they are doing who have been caught up in the Google craze. A few days ago, I sat in a meeting where we reviewed our marketing strategy for the coming year. Of the many ideas we are implementing and/or considering, PPC was mentioned. It was almost immediately dismissed. Why? It is rarely cost effective.

Over the last 2 years, I have repeatedly seen companies try and drive large amounts of traffic to their web sites using Google PPC. At times, they have been successful. However, in the end, they have all lost money. Google is making a ton of money off of marketing people who don’t know either a) the value of a customer for their business, b) the cost per acquired customer using PPC, or c) both.

On more than one occassion, I have seen companies who are happy having an overall marketing budget that comes in lower than the overall revenue being generated for those marketing efforts. What they failed to realize is that some efforts (like affiliate or SEO) made up for losses in PPC. The end result was that they happily spent their PPC money not knowing that it was actually causing them to lose money.

For example, suppose that for every $100 spent on marketing, they were making $120 in revenue. The CEO would look at that and be happy. However, the breakdown of those numbers would look something like this:

PPC
$50 – spent
$30 – revenue

SEO
$30 – spent
$40 – revenue

Affiliate
$20 – spent
$50 – revenue

Net
$20 – in the black

However, if they remove PPC from the equation, then they would be $40 in the black despite a decrease in gross revenue.

Now, I fully understand that different keywords perform better or worse, and that it is imortant to create landing pages to optimize the experience for each keyword, etc, etc, etc. But, the bottom line is that spending on Google PPC is out of control in MANY places. In some cases, I absolutely know that the top 10 bidders for a particular key word are losing money. There is no way conversion rates can possibly be high enough to support the money being spent per click.

Eventually, people will figure it out. Eventually, bids will drop to something much more reasonable. However, I’ve been waiting to see that happen for 2 years, and I have yet to see any real signs of dropoff in the PPC madness.

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3 comments so far

  1. Anup Pandey on

    I turned off google adsense for the last 3 days, I was spending $100 a day. I was getting $500 to $300 in daily sales, now perhaps I am getting $400 to $200 in daily sales, I will continue to see over longer period and compare. Certainly there is fraud, more than we are being told. The 600 clicks were getting me only $100 in sales? Either way, fraud or not, numbers tell me to put ad money else where, even a $100 a day give away to one of 5 customers that buy would do more!

  2. Sean Roylance on

    Anup,

    Thanks for the comment. I think your experience is a fairly typical one. I’ll do a new post today telling about the experience of a client last year that was very similar to yours.

  3. Wiilysfnd on

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