The Rising Cost Of Google Adwords

By @TheMarkDalton

Google is great, we absolutely love it. If you ever need an answer to something the suggestion now more often than not is to “Google it”. However, whenever I get asked by a business owner about Google Adwords my response for the last six months has been to stop spending money on it.

Adwords is Google’s paid advertising product. I’m sure you have seen the ads that appear at the top or the side of your screen in a Google search. Those are Adwords, ads that a company paid for so that people will notice their business when they are searching Google.

[easy-tweet tweet=”Every penny has to be perfect” template=”light”]

Businesses only have to pay when someone clicks on an ad. This is known as cost-per-click or pay-per-click advertising (CPC or PPC). Adwords sounds pretty flawless, it is a chance to market your business on the biggest search engine in the world, easy to launch and you can set a budget. You know you are getting in front of the right people at the right time. So why would I tell business owners to stop spending money on them?

The Cost Of Clicks

The biggest problem people are starting to experience at the moment is that the cost of Adwords is beginning to spiral out of control for a lot of keywords. When you were paying for clicks a few years ago it was not so bad because you were paying a few cents. However as more people bid on Adwords the cost has risen and now new businesses can spend up to €5 per click when they are starting out.

CPC will guarantee you a rise of traffic to your website but it won’t guarantee you new paying customers. Some keywords are as high as €70 per click. Google says on the Adwords page that you only pay for results. What that actually means is you pay when someone clicks on the ad and visits your site. You pay Google regardless of whether a sale was made or not.

That becomes an issue if you have lots of people finding you through ads on Google and not having any intention of buying your product or service. You could spend a lot of money on people who are not converting to paying customers.

David And Goliath

No way of arguing this one, Adwords is an expensive advertising model. I love Adwords, I love the control and I love the targeting but I don’t even use Adwords for myself anymore.

For small businesses, Adwords is not really a good advertising model at all. Trying to compete against established and well known brands is hard work. Smaller companies have limited resources and budgets, if you want to grow then every penny needs to be perfect.

Larger companies have consistent cash flow so they can afford to drop over €300,000 per month on an Adwords campaign and not bat an eyelid. So by the time you come to launch your business and start bidding on keywords, all of the relevant ones have been snatched up and in turn the CPC model raises in price.

To give some perspective, Gary Vee has mentioned several times before that he bought the word ‘Wine’ on Google Adwords the day it came out and owned it for $0.09c per click before anyone bid him up. Last week I was talking to someone who told me he had recently priced ‘App Development’ at around €70 per click. The prices are insane!

Even spending just a few Euro per click is a lot for businesses starting out and getting up off the ground. Remember, every penny has to be perfect.

Mistakes Cost You Dearly

Forget to turn off ads when you are done? Forget to set a daily budget? Forget to switch off mobile ads even though your site is not mobile optimised?

If you forget to set your limits or you forget to stop an ad campaign using Google Adwords it is going to cost you dearly. Google will continue to spend on your ads as much as it wants if you have failed to correctly set the limits of how much you want to spend.

Then you get hit with a nice little (or not so little) bill at the end of it all. I have worked with clients who have used Google Adwords and have quite literally thrown money away because they forgot to set daily limits or they forgot to end an ad campaign. I’m talking thousands of euro here gone over a mistake they made.

There Is A World Outside Google Adwords

Adwords is fantastic if you have the money to spend on it. As pointed out, for a lot of smaller businesses and startups this is not going to be the case. Costs are rising so high that larger companies have a monopoly on the platform and have the ability to leverage it better for themselves.

This is why I no longer recommend Adwords to clients as a form of online advertising. Currently I advise them to spend as much as they can on social advertising. Facebook is building one of the best advertising platforms in the world at the moment.

You can target Facebook ads now so that you can get in front of exactly who you want. You are not wasting a penny on distribution. On top of that, the cost of Facebook ads in comparison to Adwords is insane, Facebook ads are so undervalued at the moment there is a great chance to get on there and push it before costs potentially rise in the future. On top of that is the recent news that Facebook is now expanding the ad network to track non-Facebook users using cookies, like buttons and other plugins which means targeted advertising from Facebook is going to get much more targeted and lucrative for marketers.

Clicks on Google Adwords are currently down 20% – that is a huge decline. Why? Because social is starting to fuel online search. Don’t get me wrong, people still go to Google, if you have a question you need answered you go to Google.

However, Facebook and Twitter also have their own very sophisticated search tools too and people are also searching there now too. The fact that Google Adword clicks have fallen 20% but the CPC remains high means you are now paying all that money for something which is getting 20% less engagement than it was getting last year.

There are plenty of other great advertising tools and platforms outside of Google, so don’t be afraid to look at advertising elsewhere, especially if you are a smaller business who needs to make the money count.