12
Oct
1

Situations where Overture kills AdWords

I recently launched a service with my company and started a pay per click campaign for this particular campaign. I created my keywords and a similar ad for both AdWords and overture, set my cost per click, and added the new campaigns to each account.

Now, the Pay per click campaign so far has been the most successful that I have done in the last three years, so I am very happy with the results thus far. However, I am not happy with AdWords.

Overture has a running 12%+ conversion rate with this campaign, and has been getting well over 100 visitors per day. AdWords has a 0% conversion rate, and has only sent 20 visitors total. The ads are very similar in content, and I’m currently bidding over two times as much in AdWords than overture. So, what’s the problem?

The Problem:
The problem lies within the structure of how AdWords ranks their ads. AdWords gives equal weight to all types of key word matching, while Overture places exact matching phrases above broad match phrases.

As simple and irrelevant as this may seem, it costs advertisers millions of dollars a year in unwanted clicks, and lowers the relevance of AdWords ads.

What this specifically means (Ignore the AdWords quality scoring system):
Assume I am bidding on the term ‘small business loan’ at a Cost per Click (CPC) of $.50. (Both Overture and AdWords)
Another site, is bidding on the term ‘loan’ with a CPC of $5.00. (Both Overture and AdWords)

Someone searches for ‘small business loan’ on Google and Yahoo. On yahoo I rank #1, but on Google I rank #53.

This is because I am only competing against other websites bidding specifically on ‘small business loan’ in overture, but I am competing against websites bidding on ‘loan’, in AdWords.

Why would Google do this?
First and foremost, money! Google makes $5 per click from the ‘loan’ advertisers, and only $.50 per click from ‘small business loan’ advertisers. Naturally they are going to base their ranking from a monetary system. Regardless of the quality scoring algorithm, cost is still a primary factor in Google. In this situation, relevancy of these advertisements is all but completely thrown out the window, something that Google always claims to be their primary motivator.

In the end, the businesses that suffer the most from this system are the advertisers. The advertisers bidding on ‘loan’ don’t get qualified traffic, so their cost goes up and their conversion rates goes down. The advertisers bidding on ‘small business loan’ don’t get the traffic they want, so they find other places to advertise. Google doesn’t really care, because they think they get a bigger paycheck this way. If you don’t think money is the primary motivator of Google, ask Google shareholders if they mind their stock going down.

Burning MoneyDon’t make this mistake:
Something that I commonly see when small advertisers run into this situation, is that they go and start bidding on the major key words trying to get their ads to show. This is not what a small advertiser should do, as they will only end up burning through their money with little chance of a positive return.

My Recommendation:
First off, find more key phrases that don’t contain those major single words in them. There are hundreds of untapped keywords in every industry, that may not get a lot of traffic, but are great at converting visitors into customers. If you are only using AdWords, try Overture. You have a much greater control over exactly what position and how much you pay for your ads with Overture, which makes for what I consider to be a far superior system.

Unless you have an unlimited budget, and you are tasked with a suicidal branding mission, it’s almost impossible to directly compete with huge advertisers with deep pockets. There are ways to compete with big businesses, but not through a one on one bidding battle. In my industry, we have competitors spending well over $200,000 per month on PPC advertising. Not many small companies I know of can compete with a budget like that.

For businesses new to advertising with AdWords or if you are struggling, I highly recommend reading: ‘Winning Results with Google AdWords‘.

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1 Comment:
  1. David Walker 25 Nov, 2008

    Greetings,

    I am a new business proprietor who has spent approximately $200 with Google, $120 with Yahoo and $50 with MSN. I am appalled at how bad Google’s Adwords program. Adwords provides inaccurate information encouraging you to bid much higher for keywords than necessary, tends to report clicks that appear to be fraudulent (based on my experience anyway) and provides overzealous censorship of Trademarked words (or even words that aren’t trademarked).

    Here are 3 observations based on my experience:

    1 – Google will report my ads are not showing because I failed to bid enough rendering the keywords inactive. If I wait 24 hours and check again my keywords are still listed as ‘inactive’ yet my ad will appear at position 4 or 5 out of a dozen ads. This seems to be a scam to extort non-professionals into paying exorbitant rates for clicks unnecessarily.
    2 – In the period of 10 minutes my ad was clicked on nearly a dozen times draining my account of nearly $50 in literally seconds. Of course there is no way to find out exactly where these clicks originated from nor force Google to investigate them.
    3 – In my ads I list “MS Certified SQL Server admin”. The words “MS”, “SQL, “SQL SERVER” are all censored. No wonder searching for “sql server consultant” results in a bunch of “certified database administrator” ads. You are not allowed to advertise your products unless it is generic enough to blend in with all the other ads.

    I moved to Yahoo and the results are fantastic. Yahoo’s statistics are dead on 99% of the time, the interface is beautiful, the click filtering works (along with stats on the number of clicks filtered) and my conversion rate is much higher (near 20%!). I will never use Google again.

    MSN’s interface is just terrible but I list some basic ads on their site with low bids just to get some exposure but I don’t maintain it.

    Hope this helps someone.

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