* The Business of Software

A former community discussing the business of software, from the smallest shareware operation to Microsoft. A part of Joel on Software.

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Moderators:

Andy Brice
Successful Software

Doug Nebeker ("Doug")

Jonathan Matthews
Creator of DeepTrawl, CloudTrawl, and LeapDoc

Nicholas Hebb
BreezeTree Software

Bob Walsh
host, Startup Success Podcast author of The Web Startup Success Guide and Micro-ISV: From Vision To Reality

Patrick McKenzie
Bingo Card Creator

Is Google Adwords charging too much for clicks (Cost Per Click)?

I remember back in 2005, Google Adwords charged my business 5 - 15 cents per click. My website didn't have much or any natural search ranking at the time.

But I made money. Google Adwords made money. It was perfect.

Over the years, my business changed from a hobby to a real business that provides an income that supports me now.

It is mainly business software sold for companies. Large, medium and small companies. Government departments. Banks. Insurance companies.

It rarely purchased by individuals.

As I guess for all business software, you provide trial software that technical people download. Eventually (maybe weeks to months later) the purchasing department will buy some licenses. Due to the time delay it is impossible to work out which downloads, which clicks etc. resulted in a sale.

All of you here selling personal software to individuals won't have this problem. Just because you don't have it or don't want to understand it, does not mean the problem does not exist. Not all problems can be solved.

I sell relatively cheap software containing quite some advanced pieces. The price of my software is determined by the competition.

I try to keep overheads as low as possible. As I have a small company this is very possible.

Now the Google Adwords Cost Per Click has gone up to at the very least 60 cents. Some combinations of keywords are above one dollar.

The price was risen from 5 to 60 cents (and above) in the space of 7 years. This is massive inflation. And that doesn't count the keywords that have all moved to 1 dollar and above, which I no longer pay any attention to.

I could raise the price of my software. I have to some extent.

Having a cost per click of 60 - 100 cents will pretty much take a big  cut of the profit and for very little.

Most Google products don't make any money. A lot of internal Google projects never see the light of day. Some are plain ill-conceived.

This Adwords revenue funds zero-revenue acquisitions. Google did not write Android or StreetView themselves. It was all obtained by their check book. Google gives Android away free to phone manufacturers.

Google crows about how fast Google Chrome is, but they fail to mention all the Open Source modules it uses in the same advertising space and how it is based on Konqueror source code, which is generally acknowledge to be a very fast browser. Konqueror was available way back in 2001 long before Google came along.

The Google Cost Per Click is over twice what I see for bing.com and for download sites.

My advice is to set manual bids and not use automatic bidding.

Perhaps if we act together we could move the clock back. If everyone halved their maximum cost per click and daily budget, the Google Adwords bunch could be sent a message they are getting too greedy.

At the very least set the maximum cost per click to half what it is for certain days a week.
DontTreadOnMe Send private email
Wednesday, February 27, 2013
 
 
_IF_ their system is an auction, your idea would work, _IF_ everyone complied.  But if I was in your niche, I'd see everyone else halve their bids, and I could lower mine to just 55% and clean up.  This is a case where something works in theory, but not in practice.  And that's assuming you could get the word out to everyone (which this forum won't do).

We're all in the same boat (I have keywords that are $5 I'd like to bid on), but we keep coming back to Google because it works.  If it doesn't work, you have to adapt and do something different.  But going back in time isn't going to work.

Your inexpensive competitors must also have the same struggle.  How is their business model surviving?
Doug Send private email
Wednesday, February 27, 2013
 
 
I don't think any of my direct competitors uses Google Adwords on a permanent basis.

Over the years I've seen several of my competitors use Adwords for a few months and then stop. Some disappear into the ether and some still have websites but don't use Adwords.

This to me suggests that Google Adwords makes it more difficult to sell low-priced software on the Internet.

I really can't see how anyone in my niche can afford over 60 cents a click, so I'm amazed at clicks well above 1 dollar.

My answer to you is:

YOU DO NOT KNOW UNTIL YOU TRY.

DO NOT GIVE UP ON AN IDEA BEFORE IT IS TRIED.
DontTreadOnMe Send private email
Wednesday, February 27, 2013
 
 
****
I also said that perhaps people could try halving their daily budget and cost per click on only certain days per week.
****

For example if everybody halved their Cost Per Click on Thursdays and Fridays, it would provide a better playing field some of the time and if it is a big failure then at least you have Monday - Wednesday for things to work.

This seems like a good idea to me. It is a good way to test the waters and if it is a bad idea, then you aren't hurt that much.
DontTreadOnMe Send private email
Wednesday, February 27, 2013
 
 
> (I have keywords that are $5 I'd like to bid on),

This isn't smart of Google at all. They are leaving money on the table and this is inefficient.

If the price per click were sensible then you could have a thriving business selling cheap software without having to rely on good natural search rankings (as I did in the beginning).

Google is making is hard for small business companies to start up.

We have somewhat of a name now in our field and so we will always get a certain amount of direct traffic, but Google is screwing anyone new that wants to come on the scene as in the beginning they will have to rely on Adwords and not natural search results.

Google did good initial work, but now they are morphing into a parasite feeding on the Internet content and funneling money into projects that don't make revenue.

I am merely saying people need to act as we are seeing the CPC go up every year and massively above inflation.
DontTreadOnMe Send private email
Wednesday, February 27, 2013
 
 
>If everyone halved their maximum cost per click and daily budget, the Google Adwords bunch could be sent a message they are getting too greedy.

I suggest you read up on 'the prisoners dilemna' in game theory to see why that isn't going to work.
Andy Brice Send private email
Wednesday, February 27, 2013
 
 
>> (I have keywords that are $5 I'd like to bid on),

>This isn't smart of Google at all. They are leaving money on the table and this is inefficient.

No necessarily. Perhaps some of Doug's competitors *are* prepared to pay $5 per click.

The more competition there is for a finite number of clicks, the higher the price will go. It is simple supply and demand.

Also I believe a lot of the price inflation is caused by clueless companies throwing money at Adwords without knowing what they are doing or measuring the results.
Andy Brice Send private email
Wednesday, February 27, 2013
 
 
Completely agree with Doug & Andy - but Google have certainly done things in the last few years which annoy me; e.g. The "Quality" requirements that make me feel like I need to force keywords into hightly relevant ads & landing pages despite the relevance to the query / landing page naturally being extremely high.
Jonathan Matthews Send private email
Wednesday, February 27, 2013
 
 
btw, if someone could crack the code & write some software to help me write ads & landing pages which always have high relevance / quality without experimentation (i.e. validate them) I'd pay you $500 for that right now, no questions.
Jonathan Matthews Send private email
Wednesday, February 27, 2013
 
 
Some of the posters here have Stockholm syndrome!

Google are taking 10 - 20% of your gross income, before tax and profits. And for very little extra effort on their part.

Across all those that advertise this is a huge cash cow.

And for that Google are charging such a high cost per click that it is near enough making Google Adwords unprofitable and really just sucking money from your other forms of advertising and marketing that bring in money with less overheads.

In reply to the last poster, I have some very relevant adverts and keywords that suffer very strangely from low quality scores. The same keywords that Adwords says are of low quality and right at the top of Google Webmaster tools as content keywords!

By some strange co-incidence paying more money to Google will make your low quality keywords show!!!! And you just swallow this? Is there too much fluoride in your water?

> btw, if someone could crack the code & write some software
> to help me write ads & landing pages which always have high
> relevance

What does this mean? If Google can't write code that correctly determines relevance, then their code is BROKEN.

If you have software that works so bizarrely and wrongly, that you need to crack its code, then the software does not work, assuming it wasn't designed just to make more money from Google.

You all here need to man-up and get a spine.

Google are shaking you down until the pennies fall out of your pockets and you are smiling while it is done.
DontTreadOnMe Send private email
Wednesday, February 27, 2013
 
 
> I suggest you read up on 'the prisoners dilemna' in game theory
> to
> see why that isn't going to work.

I looked this up.

http://en.wikipedia.org/wiki/Prisoner%27s_dilemma

Wikipedia says in Prisoners' Dilemna the two prisoners have no means to exchange messages or communicate with each other.

Gee, you people on this board need to man-up and man-up fast. You are such wimps!

We have the Internet. We can communicate. We can organize.

The Google creatures are sucking up 10 - 20% of your gross income and using it to purchase companies and products that for them at the moment create no revenue.

They are living it large at the expense of real companies producing real products that generate real revenue.

And you just let them suck off so much of your hard earned money!
DontTreadOnMe Send private email
Wednesday, February 27, 2013
 
 
A few open questions:

Google is in the unique position of appearing to auction keyword placement and cost per click. Auctions are always subject to federal regulations. What facts, if any, does Google disclose about the fair market value of click throughs?

Secondly, has some governmental body like the FTC ever taken an interest in web advertising?
WannabeTycoon Send private email
Wednesday, February 27, 2013
 
 
All Google advertisers should read the following article by Benjamin Edelman.


http://www.benedelman.org/news/010510-1.html

Professor Edelman seems into online advertising and so the last poster could perhaps ask him about federal regulation of Internet search auctions.

The fact is five years ago I was able to start up a business in a newish niche cheaply. My new website has a low natural search ranking, but I could afford to pay 5 - 10 cents per click. I could experiment. If things didn't work out I wouldn't have been stung for too much money.

But now the 60 cents to 5 dollar price tag per click is just ridiculous.  It harms the Internet. It harms new people starting up businesses.

Google needs to stop wasting money on projects that don't generate revenue and start delivering proper value for the people that pay their wages.
DontTreadOnMe Send private email
Wednesday, February 27, 2013
 
 
>Google are taking 10 - 20% of your gross income, before tax and profits. And for very little extra effort on their part.

Because creating the world's best search engine was a piece of cake?
Andy Brice Send private email
Wednesday, February 27, 2013
 
 
@DontTreadOnMe

As you have descended to throwing insults around I can't be bothered to debate further.
Andy Brice Send private email
Wednesday, February 27, 2013
 
 
Andy, I'd be indebted if you did continue to discuss this in spite of (generic) insults.

I think the bottom line works out to be:

1. Google makes a shitload of money from adwords
2. If you don't know how to use adwords, you're guaranteed to lose money
3. Some people think that google deliberately sets up adwords to be unprofitable for the average joe
Bring back anon Send private email
Wednesday, February 27, 2013
 
 
Embargoes by the many against the few to bring prices down don't work.  Embargoing Adwords is like embargoing oil companies to reduce retail fuel prices.  My recommendation is to waste your energy on something less frustrating.

" If Google can't write code that correctly determines relevance, then their code is BROKEN. "
The market says Google's search algorithms are better than its competitors.  If consumers of search providers rank Google search above Bing, etc, by using Google the most, then Google's search results are the most relevant.  How is an online advertiser an objective judge of relevance?

"But now the 60 cents to 5 dollar price tag per click is just ridiculous.  It harms the Internet. It harms new people starting up businesses. "
If you can't afford those rates, then don't advertise with Google.  Support natural search by not advertising.  How is the Internet harmed if businesses that can't afford to advertise with Google, don't?  This would be important if 100% of purchasing occurred as a result of PPC advertising.  Believe it or not, there are other ways to find customers, so if Google's rates are too high, go elsewhere.
Howard Ness Send private email
Wednesday, February 27, 2013
 
 
> Some people think that google deliberately sets up adwords to be unprofitable for the average joe

I believe is is absolutely a fact that Google preconfigures things so that a lot of your spending is deliberately unproductive. Adwords by default will place ads in "content networks" which means that idiots on social media and dating sites, not just search engine users, will see and clickety-click your ads like stupid monkeys and draw down your funds.  You have to approach Adwords with an extremely defensive mindset - how must you pare down the ad exposure to what is reasonable, and what extraneous crap are they trying to sell you that you need to limit?
WannabeTycoon Send private email
Wednesday, February 27, 2013
 
 
If you have to believe it, then it's not a fact.

Either way, ranting about things you cannot prove or avoid is not productive.

As others said: many use AdWords in a way that makes them money.

If you can't, then don't use AdWords.

Monitoring your AdWords ROI is all you need to protect yourself from Google's shenanigans, both real and imaginary.
Krzysztof Kowalczyk Send private email
Wednesday, February 27, 2013
 
 
Your focus should be on building your natural search traffic.  Adwords is just one among many advertising tools in your arsenal. It would be foolish for anyone to focus 100% on Adwords traffic - putting all your eggs in the Google basket for one thing, but also a single source of traffic in general is never a good idea.

Joanna
http://www.Software-Marketing-Advisor.com
Joanna Lees Castro Send private email
Wednesday, February 27, 2013
 
 
@DontTreadOnMe

So your customer acquisition model doesn't work anymore. I'd suggest you look for a working one instead of trying to collude to artificially regulate the market.

Market regulations are communist tactics and should be avoided. If your business model doesn't work anymore and you didn't adapt it's only your fault.
Jeremy Morassi Send private email
Thursday, February 28, 2013
 
 
+100 Joanna.

Just to demonstrate that it is perfectly possible to survive organically, here is our traffic  source breakdown for the last 30 days:

- 54.5% Organic Search (mostly Google... I guess developers don't use Bing or Yahoo...)
- 29.5% Referrals
- 14.2% Direct
- <2% Paid Search (AdWords)
Dmitry Leskov Send private email
Thursday, February 28, 2013
 
 
>>" If Google can't write code that correctly determines
>>relevance, then their code is BROKEN. "

>The market says Google's search algorithms are better than its
>competitors.  If consumers of search providers rank Google
>search
>above Bing, etc, by using Google the most, then Google's search
>results are the most relevant.  How is an online advertiser an
>objective judge of relevance?

In reply to Howard Ness, you have misunderstood what I said by taking it out of context.

I said the Google ADWORDS code to determine quality score (relevance) seems to be broken as (in my case and one other commentator here), as it says very relevant keywords and adverts are not relevant.

I also said the same words Google ADWORDS says have a low quality (relevance), Google WEBMASTER TOOLS says have a high relevance.

Low quality keywords and adverts (as determined by Google ADWORDS) need more money.

This works out very well for Google Adwords.

I can't understand. My software is very much about one thing. The website reflects that. Yet Google Adwords says the keywords that reflect what my website describes are low quality (not all of them but enough). So Google Adwords requires more money to show them.

Things are not bad for me. I get a fair bit of natural traffic.

I was merely saying Google Adwords isn't easily profitable because the clicks are so high. In the days of 5 - 10 cents, I could make money despite a low  natural search ranking at the time. Now my natural search ranking is much higher.

It just seems to me they are squeezing so much that it is no longer working out for the advertisers anymore.

Another poster here sort of backed up what I said. They say they are profitable with Google Adwords providing < 2% of traffic. Well if it only provides such a small amount of traffic, then why bother with it? They might be paying 5-10% of revenue for 2% of traffic.

I am generally disappointed with the response here.

My website still makes a decent profit. I still get natural search traffic.

I am merely pointed out that I feel something is wrong here. The clicks just seem to high and pointlessly so.

I feel Google Adwords can only be afforded if you have other sources of traffic with less overhead.

Google gets all their money from Adwords. Uses it to sponsor non-profitable projects and buy-outs. Yet doesn't seem to care if Adwords can be profitable. If the clicks come down in price they would be. If the clicks were cheaper, Advertisers could pay for more of them.

You do have Stockholm Syndrome and quite frankly don't have open minds and don't want to hear what I am saying.

I still have many customers. I still make money. But Google Adwords sucks too much money for what it gives and only because the clicks have silly prices.
DontTreadOnMe Send private email
Thursday, February 28, 2013
 
 
@DontTreadOnMe - Google is acting in it's own best interests and so should you. Perhaps they should be regulated, perhaps they will be in time. For now you getting huffy because others disagree with you isn't helping your case.
Jonathan Matthews Send private email
Thursday, February 28, 2013
 
 
There are SO many things about Google you could complain about, from invasive "privacy" policies and never-expiring cookies to problems with Android etc etc.

But complaining that people are bidding too high for you to compete in the auction of SERPS? That's a non-starter.

I do sympathize however, and you're quite right that there's a distinct whiff of something unpleasant regarding how one can pay extra to become more "relevant".

It seems the more money you have, the more relevant you become and the higher the "quality" of your pages?

Google's search algo' and the exact way in which CPC prices are calculated are secrets. There are good reasons why it's secret but yes, it's both annoying and breeds suspicion. Are people REALLY bidding that much?

Sadly yes, there are an awful lot of idiots out there, often large companies, often using software, spending the company's money (not their own) and left on automatic. It really does seem that some people push the big red lever all the way forward to the "Spend all the money!" setting, then go away for a 3 week coffee break.

What you'll never, ever, do though, is get others to work together with you.

It's an auction, a competition - and even if every single software company somehow agreed to boycott, software companies are a tiny fraction of G's business anyway.


AC
Reluctantlyregistered Send private email
Thursday, February 28, 2013
 
 
Thanks Reluctantlyregistered for a good summing up comment.

I just wanted to draw attention to the fact that in 2005, Google Adwords was a cheap form of advertising.

Now something or many things have changed and it has become expensive. Was their an old rule saying you get 1 paying customer for every 100 downloads for trial software?

This seems about right. Maybe the download to sales rule might be as high as 3 - 10% depending on how good your software is etc.

This is important. As in 2005, you could market a new product on Google Adwords for little money. Now you have to shell about 6 - 12 times as much.

At the moment I really don't have much competition on Google Adwords for search. At this precise time I had 0 competitors on Google Adwords on Google search.

So much for your strong believes that it is a real auction. Perhaps Google's "Quality" scores makes it somewhat less of a pure auction?
DontTreadOnMe Send private email
Thursday, February 28, 2013
 
 
@DontTreadOnMe: Why are you making assumptions instead of asking me for clarification?

Fact is, we pay less than 2% of revenue for that traffic.  But that is actually irrelevant, because those ads target the most lucrative market segment. The rest is all organic.

> They say they are profitable with Google Adwords providing < 2% of traffic. Well if it only provides such a small amount of traffic, then why bother with it? They might be paying 5-10% of revenue for 2% of traffic.
Dmitry Leskov Send private email
Thursday, February 28, 2013
 
 
Personally I gave up on Adwords as a significant source of traffic and revenue years ago. It just did not work for us (or I did not have enough patience and time to devote to it, life is too short).

However I still use Adwords for 2 purposes:

- Brand building. I want our name to appear whenever you search for certain things. I do not care much about immediate ROI in this case. Brand building is a long term goal and short term ROI can be negative in this case.

- Market research. If I want to test an idea for a new feature or a new product I build a mini-site or a new landing page and direct a traffic using Adwords to it. This allows me to quickly get some relevant traffic. If I find the idea valuable it will become a product and further work will go into organic SEO. Again Adwords ROI is irrelevant in this case.

To OP: while I sympathize with what you say complaining does not help and there is no way you can have ALL advertisers to boycott Adwords. Think about how you can use it for your benefit or just give it up, forget about it and focus on other ways to bring traffic.
B2B Send private email
Thursday, February 28, 2013
 
 
@OP

I don't think anyone disagrees that the cost of clicks has gone up over time.  That would be expected in the beginning of a new market that has a supply/demand curve -- more advertizers see it working so they all join in and start bidding against each other and driving prices up.  It is hopefully leveling out which means we're hitting equilibrium.

Is Google goosing the bids a little higher?  Maybe -- I have no way to prove it one way or another.  But I keep playing the game because I get way better results spending $3000 on AdWords than I do from a $3000 magazine ad.  AdWords is becoming expensive, but it's still got a better ROI at scale than anything else I can find.

What people are trying to get you to see is we can't all band together and change this.  I bid against IBM and Microsoft among others.  Don't you think they would _love_ it if I and _most_ everyone else in my niche would drop our bids?  They'd make out like bandits!
Doug Send private email
Friday, March 01, 2013
 
 
Doug, thanks for your understanding reply.

It may be going somewhat at a tangent, but here goes.

A few years ago, we changed from being an individual to a limited company. At the same time, obviously, our bank account was changed, address changed etc.

We decided to create a new Google account and new Google Adwords campaign.

We noticed in our new account we were getting charged more or the same keywords. It was only 5 - 10 cents more and at the time we had plenty of other things to do, so we left it and took the small payment hit.

Our old individual account was getting charged less than our new company Adwords account. Obviously we closed down the old account.

Perhaps Google reduces keyword costs if your account has a history of using them. Anyway who knows what goes on?
DontTreadOnMe Send private email
Friday, March 01, 2013
 
 
I've tried AdWords on and off a few times the past few years. I always end up turning it off in the end because the ROI is just not there. At best, I end up breaking even (the ads bring in a lot of traffic, they make sales, but 100% of that revenue goes to paying for all the ads!) Maybe I just don't know what I'm doing.

Sometimes the CPC of certain keywords will jump several hundred percent literally overnight. I'll start bidding on a keyword, and it will be let's say $.20 per click. I start getting a decent number of clicks. Then the next morning I'll log in and find out I blew through my entire daily budget already because the CPC jumped up to $1.00 or more! I highly doubt that's just because a bunch of other advertisers all jumped on that keyword at the same time.

Eventually, I'll get frustrated and suspend my campaigns. Sure enough, my organic Google ranking will drop several spots. It happens every. single. time. Sometimes my ranking eventually recovers, but sometimes it doesn't.

It's suspicious as hell.

Has anyone else ever experienced this?
Shawn O'Hern Send private email
Friday, March 01, 2013
 
 
I wanted to buy a super bowl comercial this year for 10 dollars. Can you believe I couldn't get them to sell me the space? Don't they know they are crippling my small business? Google doesn't set the click rate at 1 dollar to mess up your business. They set at a dollar because they can sell their ad inventory at that price.

If you don't like Adwords, don't use them. There are a zillion other advertising platforms on the net. I sort of doubt you would be happy with the ROI of them either.
Foobar Send private email
Friday, March 01, 2013
 
 
Apart from Shawn's reply and maybe a couple of others, there have been a lot of replies here essentially saying "move along... nothing to see.. you obviously are too small to afford Adwords... ".

In my niche at the moment, THERE IS NO COMPETITION ON GOOGLE SEARCH FOR SEVERAL OF MY KEYWORD COMBINATIONS BY MY COMPETITORS.

YET THE PRICE PER CLICK IS HIGH ENOUGH TO MAKE A RETURN ON INVESTMENT NIGH ON IMPOSSIBLE.

We all know that with trialware and shareware you have to get 100 hits before you get 1 - 5 sales.

That is why it is important to have sensibly priced clicks.

Google has a monopoly on search. That can be very dangerous.

If you believe everything is wonderful and there is nothing wrong, please take the time to read the below article.

http://www.benedelman.org/news/010510-1.html
DontTreadOnMe Send private email
Friday, March 01, 2013
 
 
Foobar, you completely missed my point. I wasn't complaining that the ads are too expensive. I was complaining that Google jacks up the CPC by 400% as soon as I start getting clicks for a keyword...
Shawn O'Hern Send private email
Friday, March 01, 2013
 
 
"Due to the time delay it is impossible to work out which downloads, which clicks etc. resulted in a sale."

NONSENSE!

There is a thousand different ways to track this.  Cookies, Special URLs, Special Downloads for certain campaigns, phoning home once in a while, Serial numbers, and a million other things any respectable coder can come up with if need be.  Build a system to track EVERYTHING, and tweak things till you get a good ROI.

There is no time machine to go back to 2005 when making money on the internet was much easier.  Adapt to 2013.
C. Stark Send private email
Friday, March 01, 2013
 
 
Google does not have monopoly on search. True, they have very good search, and they've made sure it is the default everywhere but in the Microsoft's land, but in the end it is up to YOU whether to use or not.

I have actually switched from Google to DuckDuckGo a few weeks ago. It has been working well for me, certainly much better than Bing, and at the moment it shows one paid result at most. And when they return too few results, they provide handy links to do the same search on the major engines.

Besides, here in Russia the #1 search engine is not Google, it is Yandex:

http://www.bloomberg.com/news/2012-03-19/yandex-search-share-gains-as-google-s-mail-ru-s-portions-shrink.html

just as Baidu is most popular in China.

The way out of monopoly lies through competition.
Dmitry Leskov @Home Send private email
Friday, March 01, 2013
 
 
>NONSENSE!

>There is a thousand different ways to track this.

In reply to C. Stark, do you actually run a business yourself?

If you did run your own business, you would probably spend all your time messing around doing side-issues and never actually writing real software functionality.

So of what you mention won't work as if you read my original email, for business purchases it is usually a different person that purchases than the people using the software.

So cookies would not work.
DontTreadOnMe Send private email
Saturday, March 02, 2013
 
 
Isn't that how auction systems work? As demand increases, prices go up.  If you think google is just messing with you, set you max cpc to a low value and see if you still get clicks.

--
Foobar, you completely missed my point. I wasn't complaining that the ads are too expensive. I was complaining that Google jacks up the CPC by 400% as soon as I start getting clicks for a keyword...
Foobar Send private email
Saturday, March 02, 2013
 
 
>Isn't that how auction systems work? As demand increases,
>prices
>go up.  If you think google is just messing with you, set you max
>cpc to a low value and see if you still get clicks

In reply to Foobar, I am the only person advertising in my niche at the moment on Google Search.

I've noticed one competitor (and one only) that is advertising on the display network, but none of his/her/its adverts display on Google search.

In spite of this Google Adwords adverts still have a base value and don't seem to go below this.

We all know a fundamental of trialware/shareware is that you get 1 - 5 sales for 100 downloads.

If you are selling $200 - 400 USD, the increased cost of Google Adwords may not matter.

If you are selling $40 - 100 USD software then the increased minimum costs (even outside of competition) will erode you ability to make profit.

I am not complaining for the sake of it.

Back in 2006, a small company could start out with a decent product and a small marketing budget. Large companies with inferior products need money to pay dedicated salesmen and marketers.  Cheap Google Adwords clicks allowed start-up companies to out-complete established competitors on quality rather than larger marketing budgets.

Now the Google guys and girls have got expensive tastes and cost per click has gone up.

All Google new products are either purchased by their check book or any internal projects that launch don't make a profit.

Advertisers are being bled dry to keep the Google madness going. They are now just a parasite living off their monopoly.
DontTreadOnMe Send private email
Saturday, March 02, 2013
 
 
@DontTreadOnMe

3 questions

1. Is insulting someone who is trying to help you really necessary?
2. Do you want us all to hold hands, sing songs and cry about what a bully Google is, or do you want to discuss solving your problem?  And again this is your problem not mine.
3. If you want to try and solve how to track the ROI of your advertising, Please explain why this wouldn't work?

a. Set up ID-numbers for different keyword campaigns
b. Record those serial numbers in the program on installation of the trial
c.  When the trial becomes activated send the user to a thank you page on your server.
d.  Include the ID number in the URL of the thank you page
e.  Count any hit to that thank you page with the ID number as a sale for that keyword.

There is actually 1,000 different ways to do this.  That is just one approach.

OK to get back to your insults to me.  I really think that you were not insulting enough.  So please give me a proper insult.  So we can all see how smart you are, and how dumb I am.  Yours just wasn't personal enough.
C. Stark Send private email
Saturday, March 02, 2013
 
 
Putting aside the quality issue, where it seems google needs to work on their algorithm t9 properly judge the quality of a match),  the reason prices are high today is it's an efficient Market.

By efficient I mean that there are few obstacles to buying clicks - nearly everybody who might want to buy clicks from google can, and doesn't face technical, lack of knowledge, or regulatory obstacles to buying clicks.

That means the long term value of clicks is pretty close to their actual value to the highest bidder.  Their actual value being the point at which the highest bidder can just about make a tiny profit.

Of course this is not quite true as some people overbid, and more commonly there are keyword topics where few people are bidding, but in the popular keywords with knowledgable Market entrants, I think it is roughly true.

 5 years ago google adwords was not such an efficient Market, and clicks were under priced.  This is probably still true on sone keywords/topics, and perhaps on other search engines.

If you don't like the prices you are paying for clicks, find a less competitive place or keyword/topic to advertise, because creating a union ain't going to magically make the market inefficient - all that will happen is union members will lose out.

Fwiw I think the adsense content network may still be under-priced, so that may be another thing to consider.  A lot of people have been burned by the content network, for example by poor targeting or click fraud or because of poorly designed campaigns.  Even more people are probably scared of the content network because of fears of these type of things.  So if you can use your skills and knowledge to advertise on the content network while avoiding these issues, you can probably benefit.
S. Tanna Send private email
Saturday, March 02, 2013
 
 
C. Stark., as I said in my original post for business sales, the person that buys the software isn't the same as the person that downloads it, trials it, recommends it.

The trial and purchase has to be as simple and as quick as possible. People do get caught on every extra barrier to using the trial and buying it. Having more identifiers to type in will only confuse people further and no doubt they will get these numbers confused with registration keys  and serial numbers etc.

I should have better worded my reply as something like this:

"I have been distracted with issues other than writing new software as of late and I am now chomping at the bit to write more real software functionality that does real world tasks to help users. As such this is what I will do now. Getting cheaper clicks isn't my main concern at the moment."

When I previously said to one commenter to "man-up" my reply was meant to be so over the top, it was not meant to be taken literally.

One commentator said he/she was suspicious as hell.

I didn't write my original post lightly.

In my niche, Google looks like it is deliberately messing up.

Almost the whole first page now is full of junk results.

My direct competitors now rank just above me and just below me. But none of us get top page billing, despite really being the only 3 - 5 parties in this niche.

Bing.com actually more properly represents the software vendors in this niche.

Please read what I wrote. None of my direct competitors is on Google Adwords on the Google search page. In the past my competitors have dabbled with Adwords and they always give up after a few months.

I suspect I'm the only long-term Google Adwords advertiser in my niche. I also suspect I get one of the best downloads to sales in my niche. I base this on what my customers say.

I smell something bad in the air and I don't rant lightly.

This is a system in place that is sucking the money out of Internet software sales.
DontTreadOnMe Send private email
Saturday, March 02, 2013
 
 
@donttreadonme

No worries.  I will get over the hurtful things you said about me after years of therapy. 

But you are still focusing on complaining about Google.  "Man up"  Focus on what to do about it.  I think you have ruled out the Boycott.  So that leaves tracking your advertising investment.   

The user downloads a trial.  Somebody else buys it.  I get it, but the trial version still needs to be activated.  You can track that the trial became a paid user, and the user never has to do anything extra.  It is not a barrier at all.  Just include that you track that stuff somewhere in the EULA.

Yes it is a b*tch to do the extra work.  But that is what people do when they want to spend $$$$ on Google and still get a positive return.  We still make money buying traffic from Google and the margins are good.

Why do you think making ID numbers that match campaigns to thank you page URL's are a barrier to users?
C. Stark Send private email
Saturday, March 02, 2013
 
 
What people haven't picked up upon, is that there is no competition in our niche on Google Adwords (Google search page), but clicks are still high.

We pay for combinations of 3 keywords say 1 2 3.

There is one company in a totally different niche (not even software) that seems content to big on just one keyword. Say it is 1. It is a fairly general word.

So we pay for 1 2  3

They pay for 1

I wonder if this overlap of 1 fairly common word, is pushing up our cost per click.

Sometimes our adverts show together which is odd as we are selling totally different things. When a user searches on "1 2 3", the other company's adverts show even though words "2 3" are totally outside its niche and what it is selling.

If this is true and that a company totally outside our niche and what we are selling can push up our bids, then this seems a fault of Google Adwords.

Nobody searching for our stuff would click on their advert and vice-versa.

Why should a bid on "1" push up our bids on "1 2 3"?

This is wrong and Google should fix it?

Google does have a monopoly on Internet advertising and they should act more responsibly.
DontTreadOnMe Send private email
Sunday, March 03, 2013
 
 
@C. Stark

You've made me crystallise an idea for improving my tracking. I've had the problem for a while that I can only track a small percentage of sales through adwords & since my volume isn't that high anyway calculating the real value of a campaign is very error prone, so I'm considering the following technique:

1. Keyword groups always go through to special landing pages which record the group name in a cookie.

2. When the user downloads an installer they're given a special renamed version on the exe, which contains an id representing the ad group.

3. On installation the installer reads this id & stores it somewhere on the disk

4. When a license key is first used I can send the ad group with the license validation call to the server.

For extra points I could even group together license keys bought in bulk (team license packs) when generating stats. If found through adwords one of the installations should contain the id (the person who tried it first) & the whole set can be attributed to that campaign.

In all this would mean that the only time we're depending on a cookie is in between the first entry through adwords and the download.

Of course there are still issues. If for example user (A) comes in through adwords & shouts to user (B), "hey I think you'd like this!" & user (B) installs that should be accounted as a sale for adwords but it won't be.

Not perfect but better than what I have now.
Jonathan Matthews Send private email
Sunday, March 03, 2013
 
 
The old industrial metric is 1 sale for every 100 downloads.

In our niche, a lot of our customers say our software is the best. If you are a personal buyer our software will be one of the cheapest. If you are a business buyer our software will be twice the cost of the lowest, but still 66% the cost of the highest.

We still have a lot of functionality most of the competition does not have.

So let's say as far as price goes and quality goes we are holding our own.

We get about 200 unique visitors to our website a day. And about 4 sales.

So for 50 visitors we get 1 sale.

Again the not far off the old industry metric.

In our niche clicks are between 50 cents to 5 dollars.

So for 1 sale, Google Adwords gets 50 * .5 = $25 USD.

This is fair chunk of low priced software.

Google does have a monopoly and they are price gouging.

We simply cannot see how anyone that sell software and use the profit to invest into new research and development.

For our software it wasn't just the case of writing functionality, we had to research new and better methods of doing things.

Most commentators here either homed in on single points I made or acted as apologists for Google.

There is something wrong here. I can't see anyone in our niche being able to afford Google Adwords unless they use money gained from other forms of marketing and advertising.
DontTreadOnMe Send private email
Sunday, March 03, 2013
 
 
@DontTreadOnMe

> "So we pay for 1 2  3

> They pay for 1

> I wonder if this overlap of 1 fairly common word, is pushing up our > cost per click.

> Sometimes our adverts show together which is odd as we are
 > selling totally different things. When a user searches on "1 2 3", the > other company's adverts show even though words "2 3" are totally > outside its niche and what it is selling."

I think you are on to something here

For a couple of years now a lot of people have been complaining that Google's search results stink.  And a number of people have documented the fact that Google ignores what users type into their search queries and return lots of meaningless results.  I think you may have explained why Google's search results are so lousy now.

 If a person searches for "one two three" then it's pretty clear that's what they want, and yet they will get thousands of results  that contain only "one" or only "two three" or other results that are clearly not what they want. 

If someone searches for "one two three" why would Google display results that only contain "one"?  It really does look like Google is doing this deliberately to (a) drive up cost per click and (b) drive traffic to as many keywords as possible in the hope that people will click on them, which means more money  for Google.
Richard McBeef Send private email
Sunday, March 03, 2013
 
 
> "So we pay for 1 2  3

> They pay for 1

> I wonder if this overlap of 1 fairly common word, is pushing up our > cost per click.

Maybe you are using broad matching instead of exact? All in all, it seems you could benefit from help from someone professional at managing Adword accounts (Dave Collins?).
Goran Burcevski Send private email
Sunday, March 03, 2013
 
 
@Jonathan Mathews

Separate .exe files would catch 99% of everything without cookies but could be a management nightmare.

You can avoid this by phoning home right after the first install and assigning your unique ID number there.  At that point she is probably still on the same IP, she should have a cookie, possibly even a session ID.  Your server logs that will tell you all of her footsteps along with the referrer.  Armed with all of that, you should be able to match the Keyword referrer with 90% accuracy.  That is more than good enough to budget your PPC buys, and you don't need 400 different .exe files.

If she ever activates the software just open a thankyou page on your server with that uniqueID at the end.  That will keep your tracking tight even if she cleans the cookies and buys it 2 years later from a different IP. 

Just make sure you are crystal clear in the EULA, TOS and Privacy Policy about what you track and your phoning home practice. 

You have a nice product BTW.
C. Stark Send private email
Sunday, March 03, 2013
 
 
Thanks C. What you say makes sense. The only reason I might go for a different installer name is that if I pop up a browser after install to try & use it's cookies to track I have 2 issues:

- I've popped up a browser and interrupted the users workflow
- I'd popup the default browser, not 100% certainly the one they used to download.

If you mean my software should phone home on install (as opposed to popping up a browser) - that might work for the IP but I don't have access to her session / cookies from a non browser process so I'm not sure how that would work without the IP which has it's own issues.

Also, assuming I can read the installer .exe filename from within the installer (I imagine install4J allows this but haven't checked yet) then I don't actually need x installer builds. I can rename the installer x times. Pushing it further I could even have the download managed by a server side component which imbeds the id into the installer filename when the download is requested.

btw, I'm thinking more and more I should do this. I'm just about to revamp my adwords anyway & if I can get better tracking that'll finally allow me to base my bids more on numbers than instinct.

Just for background I think the reason my tracking is somewhat unsuccessful now are probably:

1) I sell a lot of license packs (no tracking for the 4/9 "other" licensees who didn't come in through a  search)
2) I can't track the edition bought & it's price
3) I sell to web developers - they delete their cookies a lot
4) I sell to web developers - they use different browsers a lot (perhaps they don't search for software with their default, this is a guess but I imagine it happens)
5) Sometimes the 30 day limit will kick in (although my trial type should mean this isn't so much of a problem for me)
6) The problem described in the other thread - the person installing isn't the same one who researched the options.

I can't much much that's guaranteed to work on no. 6 but the techniques we're talking about should nearly 100% solve the other issues.

btw, getting a little OT but I think this is a good example of the kind of thing many of us can to to make adwords work for us. I'd rather have this problem than try to track ROI in print.
Jonathan Matthews Send private email
Sunday, March 03, 2013
 
 
> Isn't that how auction systems work? As demand increases, prices go up.

@Foobar:

Maybe I am misunderstanding how the system works, but I'm not bidding on clicks. You don't buy clicks through AdWords. You bid on the position where you want your ad to appear. So yes, the number of clicks you will receive will be indirectly related to your bid, with higher ads receiving more clicks in general. But your click rate is also dependent on the quality of your ad copy, among other things.

So I really don't see how the cost per click could or should increase based on the number of clicks you get. Is that the tax on successful advertisers, or what? Note that this is using auto bidding. Maybe it's just a mistake to use auto bidding and I should use manual instead. But how do I know what to bid when I can't see what others are bidding (aside from just a long period of trial and error)? It's probably still better than the automatic "trust us not to overbid for you" approach. This is a system with absolutely no transparency. I'm probably just showing my ignorance though by not having a good understanding of how things work. If I am way off base, please correct me.
Shawn O'Hern Send private email
Monday, March 04, 2013
 
 
I recently added a new page to my website targeting my software to a previously untapped niche.

Nobody else in the entire word is bidding on the words in my new web page.

Then a week or so later, Google Adwords recommended I add keywords for my new page to Adwords.

Essentially Google wanted me to pay them for my new page which didn't have any competition anywhere.

It looks like Google resents people getting free traffic and wants to get their oar in and get their cut on any extra money you make.

The Google bot does not miss a trick.
DontTreadOnMe Send private email
Monday, March 04, 2013
 
 
No Shawn you are quite right to be suspicious as hell.

I don't have any competition on Google search at the moment, but my cost per click is still high IN THE ABSENCE OF ANY COMPETITION IN MY NICHE WHATSOEVER.

This is entirely wrong.

I sell software. Stupid Google (or stupid advertisers using Google) is showing completely unrelated ads when someone searches on "1 2 3" just because they have 1 word in common.

This is the other thing that is bumping up my cost per click.

As such in my niche it is uneconomic to use Adwords.

So if the great Google algorithm decided to knock you down you have no recourse other than to curl up and die.
DontTreadOnMe Send private email
Monday, March 04, 2013
 
 
What I don't get is why Google is penalizing product advertising when it is not through them? If you set up a web page advertising "xyz", your site can get penalized. If you do the same thing with adwords then you are OK? That seems like competing with merchants and users rather than other search engines. something is not right. ads above the fold get penalized unless it is adsense. I don't run these kinds of ads, but something does NOT make sense no matter what Howard Ness says.
cn Send private email
Tuesday, March 05, 2013
 
 
I should clarify that I think any kind of organized boycott and such is a waste of time. Time is better spent on finding alternate means. that's how market works.

Dissatisfaction  x Vision x Process = Change
cn Send private email
Tuesday, March 05, 2013
 
 
cn, across my multiple posts to this thread, I suggested that people use manual rather than automatic bids.

I also suggested halving bids (if they are just getting plain silly).

I also suggested if people don't want to upset their business too much, they could do it on two days a week.

I do see Google search results declining in quality.

My niche is selling software to do a certain task. It can't be done manually.

But Google has now filled the first page with general purpose help websites and forums with weak methods to do this process manually even though it is impossible.

The same manual method that does not work is spread across several websites and Google gives all 15 of these different websites top billing.

Then come the software websites down on the second page.

This change happened about a month ago.

As a co-incidence it will push the software vendors in Google Adwords.
DontTreadOnMe Send private email
Tuesday, March 05, 2013
 
 

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