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PPC (pay per click) madness

Posted by Michael Bloch in web marketing (Sunday March 5, 2006 )

It’s not just the little guys who are hurt by PPC (pay per click) auction fever. This was well demonstrated during holiday season 2005 where 2 major players (and no doubt many more) reported that they didn’t meet sales targets as a result of high click prices.

One company mentioned in this article on Internet Retailer that they wound up with sales 4% below Q4 2004 and another, while 13.5% up on Q4 2004, were also unhappy as their market had grown 25% during the same period – and they lay the blame squarely on PPC bidding wars.

For one retailer, keyword prices overall were 50% over the previous December and the price per click on its top five keywords increased by over 80%!

I watched a similar scenario unfold up until around the end of last year in a couple of industries I monitor; industries which aren’t really affected by the holiday season. Even without the Xmas frenzy, click prices got up to around $10 a throw. On my last check, prices appear to have dropped somewhat, so perhaps advertisers are finally learning – X thousand dollars worth of sales isn’t good business when it winds up costing you X thousand dollars + to generate them.

There’s usually two types of marketers who engage in these bidding wars:

a) Big players with big checkbooks – the guys who just want to wipe the floor with the competition, even if it means a loss

b) The clueless – these are the marketers who usually haven’t done their homework, get caught up in the bidding fever and wind up with their advertising costs coming to more than the profit they make. They usually don’t last long with their high bids, but when their cash runs out, there always seems to be another wannabe PPC warrior to take their place.

Bid increments can really creep up on you – 5c here, 5c there – and before you know it, you’re bidding a couple of bucks more per click than you had ever intended.

But; there’s winners of course – the ad networks and their publishers :)

Learn more about PPC

Tips for minimizing pay per click costs.

Strategies and tools to minimize PPC fraud



 

 
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