The New Roller Coaster of Google Adwords Spending

It used to be possible to stabilize a Google Adwords account and spend about the same amount every month. This made it viable for most businesses to have the profits driven by this traffic cover the costs of buying it.

With the changes in online usage and where ads display there are new enormous traffic surges that will make it extremely difficult to control and predict spending while still using best practices for advertising. Let me elaborate.

It is an important goal to have your ads consistently displayed. Here is the most common scenario for an online shopper:

1. Someone does a search, clicks on your ad, visits your site, finds what they want and will come back later to buy it.

2. Now they're ready to buy. Do they remember where your site is? How will they find you again? Answer: many will search for what they want to buy again, usually with a more specific search describing what they want.

You paid them to visit your site once and they want to buy from you. They're looking for you the day they want to buy and if your ad doesn't show up on the first page of results on the search they just did they'll probably buy elsewhere.

The way Google's system currently works if you want to make sure your ad shows up and you make that sale you have to set your budget to their recommended amount which is usually many times higher (even 10-20 times higher) than what you actually want to spend.

In the past that was a risk but rarely bit you. With the advent of sources of instant huge amounts of traffic that risk is now more than I can advise any advertiser to assume. Bear with me as I explain.

Google often "rewards" advertisers by moving their ads into the top three (top left) positions at Google search even when you are intentionally bidding for the middle or bottom of the first page of results and even if you set Position Preference to 4-10+ trying to prevent that. You can see if this is happening to your ads in Google Analytics.

Google also has a penchant for suddenly matching keywords that are very targeted and profitable to very general keywords that have huge numbers of impressions. Here is the reason I believe we now see enormous surges of traffic causing advertising spend to skyrocket:

You have targeted keywords that are making you money consistently every month at a price that is profitable. You have an awesome CTR and conversion rate on those phrases so you bid higher than usual amounts on them because they're paying off. Google is "rewarding" that success by putting that keyword in a top position.

One day Google decides your phrase for "Specific Brand Specific Product" equals "no brand, most general description of product" and decides to show your very targeted ad in a top three position for the highest traffic word there is where it shows up for every search on a site with ENORMOUSLY HUGE sources of traffic like myspace.

Your spending skyrockets 4000% and conversions plummet because searchers using general keywords are both early in the process of considering buying and likely to be looking for something you don't even sell but clicked on your ad hoping you might have it anyway.

I will post real life examples to illustrate what can happen to an advertisers spend. It is important that advertisers understand the risk/rewards.

Also understand that Google's intent is probably good. They just don't understand all of the potential implications of their changes and decisions and the consequences they will have on advertisers.

Example One

This detail was originally included as one post in the thread :
Watch Spending When Using Google Broad Match. I include it here for ease of viewing.

I can see that the change in Google's system that caused this issue occurred on Sunday, February 4, 2007.

Historically this keyword phrase consisting of a brand name and the general product description has received less than 30 impressions per day and had a consistent CTR of over 1.5%.

This is easily seen by comparing any individual day prior to 2/4/7 with any day since that date or by comparing statistics for January 1-31 and February 1-21. I have included the statistics for this specific example below.

Clicks went from less than ½ click per day to over 10 per day – an increase of 2400%

Impressions have increased from less than 27 per day to over 1146 per day – an increase of over 4000%

CTR dropped from 1.5% to 0.88%

It is obvious that this keyword phrase has been broad matched to one or more expensive, more general phrases because the CPC jumped from $1.14 in January to $1.74 since February 4 even though the average position has dropped from 4.9 to 6.7

The 13 clicks and $14.79 spent in January generated one sale while 212 clicks in the past 21 days generated no sales and cost $362.68.

Spending went from $14.79 (less than $0.48 per day in January) to $362.68 ($17.27 per day). Spending increased by over 3,590%!!!

Worse yet, where we had one conversion in January for a cost per conversion of $14.79 so far in February conversion counter shows 0 sales and Google Analytics shows one sale for that $362.68 spent. We can hope additional sales come in, but this is clearly not something we want to continue. I’ll post this and then add the fix for this problem in the next post.

Example 2

This was due to an ad on Yahoo! Search Marketing. This issues discussed in this thread can occur on any PPC engine. I posted this thread under Google Adwords because more people use Adwords and these issues are more prevalent at Google because they have more traffic.

Normal spending for fruitcake related keywords at Yahoo was under $150 per day during the holiday season. One day Yahoo decides to do a feature on fruitcake in their Yahoo Buzzlog. Those features link to suggested searches on search result pages showing ads.

Any guess how many people will click on your ad if it is mentioned on a major Yahoo page like the BuzzLog? I can give you an idea from this experience. Ad costs PER MINUTE were equal to normal ad costs PER DAY!!!

1440 minutes in a day = $1440 dollars per dollar normally spent on advertising.

The timing was unfortunate as it was during the week before Christmas when anything shipped must pay expedited shipping. We might have welcomed such a surge in sales for a SHORT period of time. Fortunately I had that account set to e-mail me when their credit card was charged and when I saw the flurry of e-mails I turned the entire account off until I could find out what was happening.

I doubt anyone at Yahoo thought featuring someone was anything but goodness. Here are some realities that probably never crossed their minds:

1. You'll either max out your daily budget or every credit card entered in your Yahoo account. Do you suppose that might cause you a cash flow issue and cost you a lot of money in interest and/or fees?

2. Even worse, depending on where you host your site it might not be able to handle the traffic and will be unavailable. You would be paying for all that traffic that can't even get to your site.

3. If they can get to your site and actually start buying do you have the inventory, manpower, and resources to actually fill that many sales?

4. It is highly likely that conversions will be far less than normal because this traffic is more similar to content than search. All those people didn't suddenly get a hankering for fruitcake all at the same time; they were "surfing the Net" and led to that subject.

5. How much money could you lose if you advertised free shipping or guaranteed delivery by Christmas and zillions of small orders came in during that crucial holiday shopping period when you pay expedited shipping? (Maybe they'd feature high dollar items but what if it were something inexpensive and you made the offer based on knowing you would make money on your typical mix of orders?)

You may want to make it a priority to set tighter budgets and reconsider what credit cards are used in your PPC accounts. You may also want to consider this type of variable into decisions on offers you make on your site.

How much traffic can a Social Networking site drive? Even posts made in a blog at Stumble Upon can drive a huge surge in traffic to your site IF they end up on the Buzz there. (So far I haven't figured out if all posts end up on any of the major or subject pages or just those that meet some specific criterion.)

I can tell you that mentioning a product in a personal blog there can send a surge of 100-200 visitors within a specific one-hour period some time between when you make the entry and several days later. Since all the traffic occurs the same hour it must be because your entry or site link ended up on a major page during that hour.

These particular traffic surges are very short-lived so the information on the SU pages must rotate quickly. They could be much larger and last longer if the subject posted about has a broader interest. Today that is free traffic; eventually I expect it will be monetized and once again this traffic is more like content ads than search ads.

Traffic from other Social Networking sites and major sites like the Yahoo Buzz Log can last much longer and may stay posted for 24 hours or possibly days.