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Thursday, Jun. 7, 2007 at 2:28 pm

Holy Traffic Cost Inflation: Paid Search ROI Down 43%!?

By Robert Gorell
June 7th, 2007

With paid search, even the most shocking news isn’t really. Consider these figures just in from ClickZ:

Despite continued growth in search spending, ROI on search campaigns in Q1 was down 43 percent since last year, according to the latest search trend report from DoubleClick’s Performics unit. That makes sense when you think about it, since more and more advertisers are competing for the same limited pool of clicks, bidding up prices and squeezing their margins in the process. The winner in this bidding war is Google. The losers: everyone else.

. . . average cost per click and cost per keyword both spiked. Campaigns included six times as many keywords with a cost per click above $1 and used 54 percent more keywords than they did a year ago.

Isn’t it time marketers finally looked beyond paid search, and focused on organic? As overall traffic costs rise, businesses should take conversion more seriously; not just as a metric, but as an integral part of their strategy. What makes people convert? Well, relevant content that answers the visitor’s questions–and in her own language–is a start. As it happens, that’s also what boosts organic rankings.

Building a site that gets organic results and converts takes dedication–and may not come cheap–but it’s the surest path to ROI.

Has traffic cost inflation been a wake-up call for your business?

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Comments (10)

  1. I think there is another factor in the equation of rising CPC pricing. This is only a hypothesis – however, more business are being drawn to CPC, but they have no idea what they are doing.

    The lack of sophistication I have seen in running CPC campaigns is stunning, especially at the SMB level. Once these markets mature I believe it will take some of the steam out if the recent increase in CPC prices.

  2. Performics, eh? :)

  3. We’ve been doing PPC since near the beginning in 2000. We used to just turn it on and let it run. You would wake up in the morning and check your computer for sales. Usually there would be a few there. Our site, http://www.parknpool.com is mostly B2B commercial sales so now we turn our advertising on and off every evening and off on weekends. The broad key terms are almost never turned on. If left unchecked like the good ole days, Google and Yahoo would drain the bank account empty and not many additional sales to show for it.

  4. [...] everyone else is touting the growth of paid search advertising, ClickZ is reporting the steady downfall of ROI (43% under last year!). Grokdotcom argues that it’s time marketers avoided paid search and [...]

  5. [...] wie Robert Gorell denke ich, dass die steigenden Traffickosten im PPC Bereich für die [...]

  6. [...] campaigns used 54% more keywords in an effort to attract more visitors. The Eisenbergs recommend focusing more energy on converting the visitors you have. And oh by the way, improving conversion by adding more useful content will also improve your [...]

  7. Not everyone´s a loser: the SEO-companies will benefit from this (growing) trend.

  8. Isn’t it time marketers finally looked beyond paid search, and focused on organic?

    I believe you can do both, successfully, at the same time.

  9. there is only so much space when it comes to affiliate marketing. the rich get richer and new get poorer

  10. Seems these days you’ve got to optimise your campaigns fully. Negative keywords can help to increase ROI dramtically but it a bit of a bore to implement. We have a free guide to help with the heavy lifting.

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