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Aug 2017
9 MIN READ

The Future of AdWords

simon ensor

When it comes to questioning Google’s future, you will often find the query met with raised eyebrows, or even questions like ‘You all good?’. After all, it’s Google and it ain’t going anywhere anytime soon. However, while I agree Google will be a staple for years to come, what about their own in house money machine? We are of course speaking about Google AdWords. From a personal perspective, AdWords has played a very important role in my life. My career for the last 7 years has revolved around the sales and management of PPC campaigns, the spoils of which have contributed financially to holidays, a roof over my head and a sweet 1997 Nissan March. The question isn’t whether or not AdWords is going anywhere; it’s a case of how it is going to get to, well, wherever it’s going. What does that look like, and should it still be considered as a core channel for marketing teams?

The flaw: bidding system

One of the biggest issues Google is yet to solve is the bidding system on Google Adwords. While on paper it works well (and has done for the last 10 years) the problem is that Google doesn’t really control it, we do. Effectively, the more companies that bid, the higher the bids become and a sequence can occur where the value of the product is pushed far higher than it really should, much like some bizarre instances of High Frequency Trading in the financial markets. This means that some industries (and their respective campaigns) can require simply unattainable money pits to make PPC work. At least not for the select few.For SMEs in certain industries (insurance, finance, law, online retail) AdWords is simply not possible, even with what would be deemed as healthy budgets for SMEs. Some cost per clicks (CPCs) are more than £100 per click. Even lower range keywords can run at £20 which makes providing an ROI fiendishly difficult – obviously depending on margins.Over the last few years Google has pushed systems like automated cost per acquisition (CPA) bidding and eCPC as ways to automate your bids based on user intent and potential conversion rate. In May this year Google removed its 30% cap on eCPC. And whilst Google maintain they will always attempt to stay under your max CPC, they would rather they didn’t. Actions such as this are a clear indicator that Google is genuinely still very interested in squeezing more cash from us. It’s like going out for dinner and the person who isn’t paying keeps buying the most expensive bottles of wine, real cool Rob.

Is the future clear?

If you search “Is AdWords still worth it?” (on Google, naturally), you will be inundated with blog posts questioning and discussing the topic. Dare I say it, the same is true if you use Google to question whether SEO has died its death yet. Hint – it hasn’t and won’t for a long time. The main point of most articles is that in 2017 there are lots of industries where CPCs are continuing to rise and have become too expensive to warrant the spend. While long tail keywords were often the way around paying £10 per click, the conversion rate and search volume can sometimes be so low that again it isn’t worth it. The future my dear, is, well, it’s really unclear.My question is, will Google scrap or restrict CPC bids? Will they trial a different method? Will CPC bids become less of a Quality Score factor?Honestly, probably not, sorry. The likelihood that Google will drastically change this model to suit us (SMEs), is like waiting to win Euro Millions, but not buying a ticket.Google made $79 billion last year from AdWords; as I have mentioned, it’s a money machine of the Galactic Empire proportions. I am however genuinely intrigued to see how Google react to CPCs when more and more customers start to divert their budgets to SEO and Social Media.

My ideas

Google is a company of monolithic size, so quick changes on the fly will never happen, especially one so important to the bottom line. However, they need to start having the conversation. Currently, if you have a low quality score (a range of factors that determines rank and CPC), Google will charge you more for a click (400% more if it’s 1/10), but if you get to 10/10, it’s only a 50% decrease or 44.2% for 9/10. If the decrease in CPC was higher for 10/10 accounts, companies will have to take a deeper look at user experience from AdWords – website journey as well as the content of the Ad.Maybe, just maybe, tighten up on the big boys who are abusing the system, outbidding everyone simply because they can, and driving the bids higher and higher. Granted, there will be major repercussions if they took my advice, but Google are not shy when it comes to making examples of big companies, look at Interflora and the Penguin update as an example.

What are the options?

Firstly, don’t rush. Yes, it’s important to have a horse in the race, and not lose valuable traffic to your competitors; however it’s also important to understand what you are getting into. You may be in an industry and location where AdWords is still a viable option, so never write it off. At least go into the process with a mindset based around education, find a transparent agency who can sit with you, show you the average CPC data and discuss recommended budgets or alternative options.
SEO
If you are currently spending money on PPC you already recognise the importance of capitalising on search traffic and as a result, search engine optimisation should be part of the conversation.SEO used to be considered a ‘dark art’ but SEO agencies can now paint a very clear picture of the process. Also, organic rankings have benefits that AdWords cannot match, the main one being that 80% of searchers click on them, and they don’t disappear when your daily budget is spent. Finally, SEO results are not instant but once the campaign is returning results it should provide a higher ROI with lower monthly costs than a PPC campaign.
Social Media
Being able to target age, location and interests as well as the CPCs on social being far less intimidating, social media is a powerful option. However I should note that while its demographic targeting is top notch, most of the time you are displaying your Ad to people who MIGHT want your products or services, they aren’t necessarily interested. At least search terms give solid indications of user intent and therefore you can target searchers that are closer to a buying decision.

Should you still do AdWords?

Within reason. At Yellowball, our recommendation is this: If your website is brand new, and you NEED traffic that results in sales/clients ASAP then it should be part of your marketing suite. It should be viewed as a channel that is pay to play, whilst you are working on SEO or more long term marketing channels. You can then scale it back as your organic rankings climb, or run the two of them together as long as the PPC campaign is providing a tangible ROI. Or, use it to promote new products or store sites, again while your SEO agency builds those keywords. You will see a better ROI blending the two, rather than relying on AdWords (or SEO for that matter) entirely. Fundamentally, if you can make your PPC budget return results then it is a viable channel. Make sure that you compare your budget to net margin rather than revenue to give you a clearer understanding of actual gain. In this scenario, you can then scale your PPC spend until it starts to provide diminishing returns, or (often due to cash flow) the spend starts to inhibit your ability to diversify your marketing channels.
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