PPC Trends 2007

Paid search initially was a great invention to advertisers, as it has become one of the major channels in marketing your products or services online. Over the recent years PPC experts have been emerging from all over the world. PPC has therefore become an occupation of its own.

However, competitions in the pay-per-click industry have become tougher over the years. I expect everyone in the field will encounter more serious challenges in 2007. Here are the 5 reasons.

Reason #1: People tend to move towards where the money is

By looking at Google’s increasing revenues from its successful paid search platform Adwords, people could get false impressions. They often think by understanding some basic tricks on PPC and by investing a fairly small capital, they will make huge profit from their investment. However the truth is that there could be many advertisers trying out on paid search, and only the ones who truly understand pay-per-click will make profits consistently.

Reason #2: Bid management systems are getting smarter

You may find your competitors are catching up on you by using improved bid management systems, whether the tools are on subscription based or self-developed.

The major PPC search providers (e.g. Google Adwords, Yahoo! Search Marketing, MSN Adcenter, Baidu and even Ask.com) have all included click-through-rate (CTR) in their ranking algorithm calculations. Due to this reason, old PPC systems will be re-developed and upgraded. It is generally very expensive to create your own technologies, but serious companies in paid search marketing will invest more on either developing new systems or polishing their existing bid management tools.

Reason #3: Your competitors have gained experience

Now your competitors have smarter systems, they will then hire experienced and smarter PPC experts. Great strategies and decisions can only be made by smart experts. I have never seen a single paid search campaign completely relying on the computers to make decisions, not even when the algorithms are perfect.

Reason #4: Keyword click price inflation is to continue

The cost-per-click (CPC) prices on most of the competitive keywords are still to raise. This is caused by the effect of bidding wars from many advertisers, without any desire to be cost effective and competing in the same “keyword” space. These are the few of the many reasons that CPC prices will raise:

  • Marketers who have large budgets and do not have to watch the revenue on investment (ROI).
  • Brand marketers who simply bid high to protect their brands.
  • Advertisers who are required to reach some seasonal sales targets.
  • Multi-channel retailers who are selling from both offline and online.

Reason #5: Click fraud

Click fraud has always been a big concern to the entire paid search industry, and it is happening all the time. It will cause you a great deal of advertising budget, if you don’t watch out for it!

Major search engines do have their own ways to prevent and detect click fraud. However, they will not disclose these methodologies to prevent the real click fraudsters from easily finding ways around it. There are other ways to spot click fraud to some certain extends.

Advertisers can always try to ask for refunds from search engines provided they have submitted solid proof of evidence. However, many in-house PPC managers are reluctant to do so, as their campaigns lack a comprehensive click fraud detection system. In this case, they may want to seek help from companies that are specialized in managing paid search campaigns for clients.

Comments

6 Responses to “PPC Trends 2007”

  1. 5 Reasons Paid Search Becoming More Competitive In 2007 - Google Adsense, Google Adwords on February 6th, 2007 8:01 pm

    [...] Original post by PPC Expert & SEO Strategist Blog by Gordon Choi and software by Elliott Back Tags: adwords, seo, online marketing, search engine [...]

  2. Rob on February 11th, 2007 8:13 pm

    Great post Gordon!
    A 6th reason i would add to your list is the fact that conversion optimisation is getting better and improved conversions obviously mean advertisers can bid more for each click.
    At the end of the day PPC is a pretty fluid economic system and I think prices still have a way to rise before they reach equilibrium.

  3. Gordon Choi on February 15th, 2007 4:15 pm

    Rob, you’re right. I should have included conversion optimization as you have mentioned. As a performance based search engine marketing business (Clicks2Customers), improvement on conversion optimization is one of those things we have been able to do!

  4. ms danielle on July 24th, 2007 8:17 pm

    i have a friend whose business partner dove into PPC himself, against the advisement of myself and another (unknown to me) seo manager friend of his. unfortunately, i think google is making a huge profit off of small business owners who are on the fence about hiring a professional to oversee their advertising efforts, and end up doing it themselves. it’s bad for people like my friend whose money is being wasted, but also for advertisers trying to compete with some of these unknowing competitors who are bidding arbitrarily in the dollar-per-click range…

  5. Gordon Choi on August 5th, 2007 6:13 pm

    I’m not trying to scare you, but the truth is that PPC as a professional is so complex and is ever-changing. It is quite impossible to get to the bottom of it until you do it everyday alongside some very experienced ppc experts. Most of the people have managed a couple of ppc campaigns can easily claim that they know how to properly manage and optimize campaigns, but the truth is that they don’t necessarily know even half of what they are doing.

  6. botez on March 9th, 2009 4:01 am

    I justinvest a huge amount of money in corecting my websites Seo errors… My wonder is… if google will change his perspective do, isn’t going to involve a future investment for a big number of companys ?

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