Pay Per Click Conundrum – Google the cash hole ?

Google profits are soaring and soothsayerers are exclaiming that though this stock is gold it must be close to over performing; so why would anyone make a statement like this : Pay per click Advertising in Google is Dead.

Well it could be a little further from the truth, ha ha, but not much. In reality, Google’s stock isn’t exactly roaring ( nobody’s is at the moment ) but the latest online Neilson polls show Google with a commanding 63-71% of the market place and continuing it’s slow but relentless climb.

What’s good for the goose isn’t always good for the gander and in this case what is good for Google hasn’t always been good for the advertisers. For those without knowledge of how its done - Google’s advertising is done based on a highest bidder system.

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.

One had truly hope that they beeline for the bus doors immediately afterwards, because if they wander over to join the auction, the prices of all autos will go uphigher and higher. And was this good for you or the Auctioneers? You already know the answer to that one.

The death of adwords right? Does it make more sense now? The tool becomes less and less useful to you as the price per click skyrockets.

So, perhaps the rumors of the death of Pay Per Click were justified? Google has already said that mom and pop bidders are the most careful and get the highest returns and best ROI. But lately, that could just be because they either aren’t bidding or have found somewhere else to bid.

Deep pocketed bidders without a sense of ROI can bid certain keywords to near unreasonable prices.

What is currently happening to many of your campaigns that were turning a fair profit just 4 months ago? How about those absolute winners that you have had running for a couple years? You have adjusted, pruned optimized and now there is very little left you can do. The frustration sets in and you are regretfully pause the campaign. Its now, no longer profitable.

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 a few guys have been taking action. A few weeks ago, while consulting for a real estate friend, Randy, I noticed that over 40 real estate brokers were bidding in Google for 3 key phrases and almost no one in Yahoo.

By the end of the week, my Google adwords account had recorded just less than 10,000 impressions on just 4 popular search terms. My Yahoo Search marketing account had barely cleared a thousand.

Nimbly and joyfully the gang of 40 plus real estate agents in Toronto bid the pricing above the 1 dollar mark, while the Yahoo search costs stayed under 10 cents.