Rob Cheng
Dave Methvin
Steve Hogan
Lyle Schuknecht
Steve Bass
Harry McCracken
Chris Pirillo
Bill Pytlovany
John DodgeGoogle and the Price of Oil
We spend a lot of money on advertising and a lot of money in search. Just got off the line with our advertising guru, and in rough numbers, we burn over 6 times as much money with Google than we burn with Microsoft and Yahoo COMBINED. That's an astronomical difference between Google and the rest. Furthermore, we have tried to spend more money with both Yahoo and Microsoft, and neither has enough relevant search results to allow us to increase our spend.
How does one get in this place? Google has the lead in two critical areas. 1. Still today, Google has the lead in superior search results. The end result is a substantial gap in the quantity of search page views. But more importantly for us advertisers is Google's advertising engine. Google's ad engine allows us to place our ads on the pages that matter most. 2. Equally important, Google's ad engine does a superior job of ensuring our ads don't show up on irrelevant pages. The reality is, Google has a 1-2 punch that Microsoft and Yahoo cannot match. Not even close. That explains our disproportionate ad spend with Google.
But we are not happy Google customers. Far from it. In the last two years, our cost per click has doubled with Google. Furthermore, our placement in Google ads are flat to down. This means that we are paying twice as much for the exact same thing. That's right, our ad costs at Google are rising faster than the price of gas at the pump.
Here's what makes me mad. I know why the price of oil keeps rising. The war in Iraq, China and India's burgeoning economies, and lack of affordable energy alternatives. Although I don't like it, I can accept it. No one has given me a logical reason why our prices are up at Google. Google's most common response is that we have more competition, but it all seems more like hand waving. With all the babble of click farms and click fraud, I think it has more to do with that. But who knows?
Then on the organic side of the house, it is infuriating trying to figure why Google ranks us higher in one area, and not at all in another. Again, no answers just hand waving. Yes, we can hire a SEO specialist that will charge a ton of dough, to guess at Google's search algorithms, but the reality is no one really knows. We are all just out here guessing from the outside in.
These are the reasons why we were quietly rooting for a Microsoft-Yahoo merger. Despite Google's dominance, they still have a lot of room for improvement. The internet is by far the most astounding human development of my lifetime. It brings parity, equality, and openness to the entire world. A true game changer. Without a Microsoft-Yahoo merger, who knows who will force Google to improve their game? I believe it will eventually happen, we had just hoped that a Microsoft-Yahoo merger would be the accelerant.
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June 18th, 2008 at 4:36 pm
Google's dominance is kind of a mixed blessing for some of us who manage multiple clients' Adwords accounts. On the one hand, I see the same thing that you mentioned about seemingly arbitrary cost per click increases. I've had a couple of instances where the customer's cost per click kept going up until the sales per click and the cost per click equation forced them to stop altogether. On the other hand, it is much more efficient to manage one group of accounts and get familiar with one user interface than it would be to have to set up and maintain keywords and settings on two or three search engines. If we continue to publicly hold Google accountable for click rates maybe they'll be at least a little wary of customer backlash.
John
June 19th, 2008 at 1:19 pm
It is high time for a new system to appear to super seed Microsoft I do not think that they are the only group to develop a good program. Vista is the worst it burns your hard ware and eats you memory worst than the 8 cylinder fuel gazelle-rs
June 19th, 2008 at 9:09 pm
Oh please, no Microsoft, Yahoo buy out. Microsoft will just screw it up, and then there will only be Google. Microsoft just wants to eliminate some competition. One reason I believe the PC market is so oh hum today is because Microsoft is on top of the heap. Why can't another PC maker, or Google come out with a better operating system, it could be done. Would bring back the PC glory days. Former MS Fan from the DOS days.
June 19th, 2008 at 10:04 pm
We're damed if we don't and sorry if we do.
June 20th, 2008 at 5:33 am
I tend to agree that MS had no intention of making Yahoo any better. It was all about eliminating competition.
But then the author really has no clue about gas prices either. While AU is paying for 100% imported oil/gasoline, their gas prices have gone up $.20/liter while the USA has gone up $2.00/gallon.
Who uses Google ads anyway? I intentionally stay away from them. Seems funny to me that anyone would pay to have ads listed on a search engine. I can't feel sorry for someone silly enough to rely upon search engines for business.
June 20th, 2008 at 10:20 am
Hi, I'm afraid that I no longer use Google because of the amount of data that they collect about companies that use them, But not only that but even the people that use google to search for items/information, they then pass-on that information to third parties. I don't like my details spread about, Ditch Google That's What I Say. regards Don
June 20th, 2008 at 1:11 pm
While I do use Google regularly, I always, always delete any of their cookies and temp files left behind. While I'm sure they still have info on me, I don't think they can target ads to me.
June 20th, 2008 at 3:52 pm
Unfortunately for you advertisers, Google protects its trade secrets, which is sensible because it's so good (as you describe yourself). But you at least know the basics, right? (It's a multi-item auction, Google maximizes revenue, placement is based on total revenue = click rate * price per click, not just on price per click, etc.)
I'm not sure you'll be very satisfied with the answer if Google were to open up - you'll probably just see that everyone else with (average) higher placement is paying more (in terms of total revenue to Google).
I know that one way to improve things for you is to improve the quality of your ad such that more people click on it. Then Google gets more money (due to more clicks), you get higher placement (since Google wants to maximize the number of people clicking the ads), you can drop your price per click slightly (Google only cares about increased revenue, and you already increased the revenue to Google by more clicks, so you can pull back some of that per click), and it's relatively win-win.
I guess the only hope, beyond that, is to hope Google gets some competent competition one day.
June 20th, 2008 at 4:09 pm
To dark41: people pay for ads because they get a return from them. The organic side of my web-site does well - ranking in the top five for all terms that I care about. Yet I pay Pay per click prices because it brings me additional busines. There's nothing like being on the same page multiple times.
Oh, by the way. For those complaining at the cost - have you looked at other media costs. Print, TV, Video, etc. At least in my business, the returns aren't nearly as good.
June 21st, 2008 at 1:33 pm
I have stopped using Goggle for any searching whatsoever just because of the fact that when I search for something I get the same site multiple times and it is a big hassle and very frustrating. so I use Yahoo primarily for any searching. True Microsoft would just eleminate Yahoo if they had of bought it.
June 23rd, 2008 at 3:31 am
Google search engine
Google earth
Google maps
Google email (gmail)
etc.
Now just be honnest : Does anybody know BETTER alternatives for these kinda programs ? And I mean FREE programs that run stable and are extremely useful and easy-to-use for everybody?
Let's not bitch, but be thankful … Just compare the prize for what we get from Google and what we get from MS…
For the companies that use/pay for the ads : I guess that a google ad is still worth it's money…
I'm just hoping/praying that one day google will come up with a serious OS that laughs at the dragons that MS makes lately. And I wouldn't mind that there's a few (relevant) ads that save me from paying a couple of hundreds for an OS that s*cks…
Right ?
November 5th, 2008 at 3:35 am
Ha, fun to read this article.
I almost never use Google, nor do I use Gmail or any other of their services.
I also have a very effective ad-block, Google ads are never displayed on my screen. Often on other sites, there are small empty spaces where it says with small print "Google ads", or something similar.
Corporations can just continue to put money in Google's pockets. They aren't reaching me and other users with ad-blockers.
The ad-free internet is a joy.
Quote:
"Don Says:
June 20th, 2008 at 10:20 am
Hi, I'm afraid that I no longer use Google because of the amount of data that they collect (….) Ditch Google That's What I Say."
I totally agree!
March 25th, 2009 at 9:12 pm
It sounds like you're creating problems yourself by trying to solve this issue instead of looking at why their is a problem in the first place