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Monday, Jan. 8, 2007 at 6:44 pm

Some Google Advertisers Cutting Spending

By Anthony Garcia
January 8th, 2007

From Dow Jones MarketWatch…

Keyword inflation, low conversion rates sending merchants elsewhere

SAN FRANCISCO (MarketWatch) — A growing number of online advertisers are bidding a partial goodbye to Google Inc.

Frustrated by the soaring price of Internet-search advertising and diminishing returns from the ads they buy, mid-sized advertisers say they plan to reduce how much business they do with Google this year — in some cases, significantly.

Last year, for example, eBags.com co-founder Peter Cobb spent between $5 million and $8 million to peddle suitcases, handbags and other carrying cases online. Google got 75% of that amount.

But this year it will get “significantly less,” Cobb said. “The Google percentage has got to go down,” he said.

In many cases, the cost of an eBags.com ad placed on either Google’s own Web site or one of its affiliates now equals 45% of the price of the product it promotes. That’s crimping the company’s own profit margins and forcing it to look elsewhere to market its bags.

“We’re testing print ads right now,” said Cobb, whose company will spend up to $8 million on ads in 2007. Read the rest of the article

The article continues…

Keyword search prices on many terms rose between 40% and 60% last year, according to advertisers like Dan Sackrowitz, chief executive of Bare Necessities, which sells lingerie online. He saw his Google ad budget soar 50% last year.

The problem is obvious, traffic costs are puffing up like a marshmallow in a microwave and advertisers are having a hard time finding ways to increase traffic and lower costs. Simply put, Google advertisers are hooked.

Instead of looking for ways to increase return on traffic investment, the average marketer will look for another traffic fix. We’ve said before that the marketing battleground of the future is not traffic acquisition, it will be traffic conversion.

The exceptional marketer is looking for ways to optimize their keyword and landing page conversion rates.

Optimizing landing pages is something we’ve been doing with our clients for quite some time. We are a premier channel partner with Google and their new testing platform Google Website Optimizer beta. If you are interesting in our landing page optimization coaching service, we are going to take on a few testers over the next few weeks to participate in this beta with us. Contact us if you want to know more.

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Comments (5)

  1. Great post – very informative – - we undertake Internet Marketing in the UK, offering a similar website optimisation service.

  2. No wonder! They should look to extend the investment to long tail keywords.

  3. I feel this pain. My keywords are in the data recovery sector…

  4. Once a few companies start reducing their spending, others will achieve a better result by increasing theirs. There is no way around it whilst Google is the King of Search.

  5. there are only so many spots to receive traffic from, mainly the big boys get the business who are willing to spend the money to bully the smaller competition out

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