Tuesday, December 2, 2008

Pay Per Click Conundrum - Google the cash hole ?

By Trevor Weir

Every month some prognosticator predicts yet again the demise of Google. It seems like a repeat of when they used to say the same about apple. So, what good is it to say that Pay Per Click advertising on Google is dead.

In truth, nothing could be further from the truth. Pay per click advertising with google adwords is roaring ahead, much to the chagrin of ask, MSN and the number 2 giant Yahoo. So, if this is truly the case, why how could there be any truth in this unsubstantiated rumor?

Would Google's popularity hurt the customers? No, its a win win for them with more advertisers, more choices and google pumping more resources into faster servers etc. How would this work at a car auction if the bidding area was suddenly flooded with triple the number of bidders - stopped off on their way to a casino ? Would the cars be cheaper or more expensive?

For those not familiar with how this works, imagine that you typically waste your Saturday afternoons at the local car auctions hoping to pick up a great car for cheap. You know that the fewer people bidding is the better your chance of snaking a prime 4 year old vehicle for a few thousand dollars. On the last bidding day of the season, 10 busloads of rich gamblers stop by to use the bathroom.

You better hope that they beeline for the bus afterwards, because if the wander over to join the auction, the prices of all vehicles will go up. And was this good for you or the Auctioneers? You already know the answer to that one.

If those cash rich players on the way to the local casino actually don't spend all their time in the bathroom, they are likely to bid on a few cars just for the hell of joining a live gambling arena.

So, now you understand what we mean by the death of pay per click? When there are too many bidders bidding for the same set of keywords, the price is going to go up. Some of the bidders will have deep pockets and nothing else.

This indirectly says that many corporate buyers are overbidding keywords because they don't have the time to seriously learn the craft.

Would you pay 9 dollars for the keyword phrase Internet marketing? Most of us would say this is a little pricey. A hundred clicks later, and you are almost at a thousand dollars. With a 3% conversion rate, you would need to be selling a product for 600 dollars at 50% margin just to get close to break even.

Not funny right? But this scenario is being played out all over the pay per click world all day long.

Suppose I told you that while a few of us having been noticing this trend lately, that two guys decided to do something about it. After a few months of testing and proving out their theory ( and selfishly keeping a half million in profits from something called the Yahoo cash machine ), they have decided to let the rest of us in on the secret. Sound too good to be true? Yeah, perhaps, click here and watch the video to see specifically how they pulled this incredible feat out of Yahoo which most of us had well, almost written off.

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