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Monday, January 08, 2007

Advertisers Throw Away Money, Blame AdWords

I see this as good news.

"Yet Shmuel Gniwisch, founder of online jeweler Ice.com, got a conversion rate of less than half a percent for the $750,000 worth of ads he placed through Google during November and December, a key selling season for retailers.

For every 300 people who clicked on an Ice.com ad, only one actually purchased something, Gniwisch said.

"You couldn't get a worse performance," he said. "

Every time I see one of these articles it amazes me. You burn through 750K in two months getting a pathetic conversion rate all along then talk about it when it's over like it was Google's fault. I worked in direct mail for almost a decade and we didn't blame the post office when a mailing tanked - we blamed the copywriters, designers, product marketers and everyone else but we didn't blame the delivery channel. Just like every other form of marketing a lot of elements come into play in relation to making or breaking a campaign. Maybe it was the ad copy, landing page(s), keyword selection/matching options or a combination of all of the above that produced those pathetic results. It's too bad all we get from this story is the "AdWords sucks" line instead of the complete picture.

I bet a lot of these advertisers would tell you AdWords doesn't work too even though it's their keyword matching that's causing potential issues...unless of course they are giving away "free diamonds".

Oh, when I said I see this as good news I meant that I'm always happy when people with too much money and not enough sense drop off the keyword map and stop driving up keyword prices to the point where they make no sense for any advertiser.


10 Comments:

At 4:20 AM, Blogger Johan said...

2 points...

1. These people are obviously out of their mind. If you have a close to a million (or like some in that article, around 6 million) to squander then SURELY you have a dedicated team sitting on the ads 24/7?!!!! Good riddance indeed.

2. To their defence, though they haven't brought up this exact point, from my combined stats including AdWords, Analytics and in-house stats like apache logs I see a trend where customers surf around more. They seem to be more familiar with (shopping) search engines and price comparison tools so they know that if they spend 10 more minutes they can probably squeeze another 5% off the price. Often well worth the effort.

So what does that increased window shopping mean to us? More clicks for the same (or smaller) amount of sales. Conversion rates will drop. Not because of a bad ad, bad landing page, bad keyword targeting or any other reason but merely because the online customer is more savvy and will go the extra mile to find that bargain.

So if the price is not perceived to be fair, you're stuffed. And monitoring hundreds or thousands of products' prices is a PITA and tough to automate.

Now I'm interested to know... Am I the only one arriving at this conclusion? It's not meant as an excuse for poor ad performance by the way, I realize full-well the responsibilities of the AdWords professional. It's just a trend I'm seeing.

 
At 3:03 PM, Blogger Jeremy Mayes said...

"I see a trend where customers surf around more. They seem to be more familiar with (shopping) search engines and price comparison tools so they know that if they spend 10 more minutes they can probably squeeze another 5% off the price."

I've been noticing the same, and it's been on the increase for quite some time.

Check these out:

jewelry

3 of the 5 next searches were for stores (doing some price shopping)

audio books

3 of the 5 next searches were price comparison related as well...and one of the others included the word "free" which signifies more price comparison.

As consumers become more and more Internet savvy we'll only see this trend increase. It's not like the brick and morter world where a consumer needs to exert any level of effort to comparison shop. A better price is just a few clicks away...

 
At 10:54 PM, Blogger Tyler said...

I agree with your thoughts that the advertisers are to blame if they do not provide the right keyword and ad combos. I think adwords is more to blame than you think.

To use your example of the mailings. If the post office raised their prices and you were converting the same but no longer making a profit...you would blame the post office.

I am not suggesting that you do not need to change and adjust with the environment in your marketing channels, but it is hard to believe that you would blame yourself for the post office increasing prices.

 
At 3:57 AM, Blogger Stelios said...

What i dont understand is the jewelery company!? Lets say you spent 50k you dont see any ROI, you dont say anything. You spent 100k very low ROI! What are you waiting then?? Why you dont ask the company or the person that is running the campaings. What is going on dude? I have spent 100k and nothing my sales are very low?! I think that

 
At 8:27 AM, Blogger Jeremy Mayes said...

Tyler,

Between 1994 & 2000 there were a few rate increases imposed by the post office. Typically they hit standard class (bulk) mailers with the largest % of an increase. Every one of these increases meant millions in additional expenses to us, ut we didn't "blame" them. We worked with our other suppliers and completely reevaluated how we did things to offset the additional expense. I like to think the rate increases forced us work smarter.

What we didn't do is just keep sending out mailing that lost money...and that's what I feel the diamond guys did with PPC. I have to think that at some point very very early in that campaign someone had to say "this isn't working, we need to cut it off until we can fix it." Doesn't look like that happened though...they just kept spending regardless of the profitability. Who's to blame there?

I just think that article presents a 1 sided view of the situation. The author wrote the article in a way that makes it look like AdWords is at fault when that's just quite frankly not the case. There are a lot of other factors that come into play here. Keyword options, langing pages, search vs content, position preference, geo tareting,competition, etc, etc, etc.

10 to 1 says Ben Charny,the author of the article, has never run a PPC campaign of any kind. When you just toss together a bunch of quotes from other people about a topic you don't know much about and call it an article I suppose that's what you get.


ps - stelios - I see where you'e going & I would agree.

 
At 3:29 PM, Blogger Alan said...

Following the Ice articles, we took a deep look at this across our client base. From our perspective, sliced many different ways, Holiday 2006 was on average strong.

http://www.rimmkaufman.com/rkgblog/ 2007/01/02/ holiday-2006-sales-performance/

-- Alan

 
At 2:45 PM, Anonymous Kai said...

I've had the best conversion rates with really small sets of keywords (less than 20, sometimes less than 10), paired with relevant ads and landing pages. I think it's laziness that leads to poor conversion rates, and by that I mean clicking "Add all" in the AdWords keyword tool (among other things).

 
At 2:54 PM, Blogger Jeremy Mayes said...

Kai, most of the time I have 1 word/phrase per ad group and am testing a few ad variations.

I manage a number of campaigns and quite afew keywords...can't imagine just sitting back and watching 750K go down the crapper.

Too many people think they can just set up a PPC campaign and check back in month or two to count up the money they've made. They will learn the truth...it'll just be expensive:-)

 
At 3:11 PM, Blogger Jeremy Mayes said...

http://internet.seekingalpha.com/article/23172

"They both proved to be extremely poor marketing tools for ICE.com and many of our retail friends," Gniwisch said. "This was most evident during this most crucial time of the year, the holiday shopping season. Traffic from these portals were up cpc’s (cost per ad click) were up but conversions were way down."

*shaking my head*

The more of his quotes I read the more I understand why he's complaining - he doesn't get search marketing or PPC at all.

I really wonder who managed his PPC work...and internal employee(s) or an agency. In either case they really dropped the ball.

 
At 3:24 PM, Anonymous Kai said...

Jeremy, I couldn't agree more. How anyone could waste 750k is beyond me. They probably did it themselves. They should have had enough sense to stop the campaign after a few days and have someone who understands PPC make changes.

 

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