Why PPC No Longer Represents Your Best Investment In AdWords

In 2013, Google made 58.8 billion dollars on advertising.  It  is safe to say that Google is taking over the world, and you are paying for it.  The PPC model is at the heart of this subtle take over.  Keyword bids continue to rise as their demand increases.  Take for example the word “insurance”.  The average bid for the keyword “insurance” is up to 55 dollars per click.  To me that is absolute madness.  How does the average business owner expect to see great returns on such a hefty investment?

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Avoid the Great Bidding War

Imagine if you had gotten into AdWords in the early part of the millennium (AdWords was introduced in 2000, self service accounts became available a couple years later). AdWords was a new platform. Bids were low and therefore the opportunity to maximize your return was high.  If you look in the right place you can find that this opportunity has re-presented itself to us. In 2006 Google bought YouTube, and just over two years ago they added TrueView (YouTube) Advertising to the AdWords family.  Much like where PPC was 10 years ago, opportunity is ripe in TrueView.  The same bid for the keyword “insurance” would cost you no more than 10 cents on TrueView.  Compared to 55 dollars on PPC ads, that ain’t half bad.  For you PPC buffs thinking you can jump right into this and find success, you need to slow your roll a little bit.  While TrueView is managed in the Adwords platform it is a whole different ball game.  You have to put in the offseason work before you get into a regular season game.  The main reason for the difference in strategies is linked back to the difference in models: PPC (pay per click) vs. PPV (pay per view).

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PPC vs PPV

Situation 1: PPC

Let’s take a look at what your cost per click will look like in a Pay Per View model.  If we look at a phrase like “Real Estate Investing,” we find that keywords can be pricey.  That specific keyword is around 8 bucks per click.  The average cost per click for related keywords is above $20.  That’s absurd.  If you had a 1% conversion rate, which is actually pretty good, that means for every 100 clicks you get 1 conversion.  Based on a 20 dollar CPC you would be paying $2,000 big ones to acquire a customer.

Real Estate Keywords CPC

Real Estate Keywords

 

Situation 2: PPV

Now let’s look at this from the the PPV point of view. This information comes from one of our clients.  If you look at their campaign, the total cost was $95.10. From that cost they had 83 clicks. That is a cost per click of $1.21. Comparing this to situation 1, if you get a 1% conversion rate it would take $121 to acquire a customer. If you gave me the choice between spending $121 or $2,000, guess which one I would choose?

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Stealing Attention

In a pay per view model you are paying to steal someones attention.  Think about it, these people are not searching for your product with an intent to buy something. They are on YouTube to watch their video.  You can use the perfect keyword or the perfect placement to put your ad in front of the perfect person (someone who should be your future customer), but if your ad sucks they are just going to skip your ad and move on to their video.  They will not click your ad, they will not go to your website, and they will not become your customer.

What Does it All Mean?

There are two morals to the story.  The first, I believe, can be described in the words of Mr. Robert Goulet (or Will Ferrell on SNL), “You wouldn’t hire a clown to fix the John.”  In other words do not believe for a second that just because you know PPC that you can do PPV.  Second, while PPC is great, it does not offer the opportunity that is currently available with TrueView.  I don’t know about you, but I like lower costs, free traffic, and the possibility of higher returns.

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If you have had success with PPC, then you can likely find that same success with PPV (if you know what you are doing).

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About the Author

Cooper

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I manage multiple campaigns for our clients. I also write a lot of the content you read here at Video Power, and head up our social media. I will no-shame invite you to follow us on social media. Just click on the Facebook and Twitter links. DO IT!

Comments 9

  1. So things would be easier for both, for you and your car mover.
    The 3 main advantages to having a LED TV without going into a physics lesson about the technology behind it.
    Nonetheless, it was a constant source of contention between my parents and me whenever I would ask to go somewhere
    in my car.

  2. Great perspective, Jake! I have noticed as well that in digital marketing, it almost always pays to allocate more budget to emerging platforms than saturated platforms. For example, during the first year of Vine, a brand could integrated with a video with a top 10 Viner for as little as $2,000 and get 100k+ re-vines. With a re-vine getting at least 20 impressions each, $2k for 2MM video views (loops), it was $0.001 CPV! Hot or Not app and Badoo found out they could consistently drive downloads for well under a dollar, getting 300% ROI, reeling it in all day. Vine is still a great buy, but now top 10 Viners are $8k+. YouTube is still, in my opinion, where Vine is for advertisers. YouTube is pretty saturated from the content creator perspective, but it’s still WIDE OPEN for advertisers. Such a good point about PPC, Jake. Thanks! Video Power Marketing rules. LOVE this blog.

  3. Jake,

    I agree, the PPC model has gotten completely out of hand. PPV is great BUT there are so many video (producers) who do not know what the heck they are doing! They do not know how to grab the attention of-would be viewers-there in lies the rub. I think (before) the PPV model gets just as crazy as PPC has…advertisers should take a course at their local college or library on video production, a WRITING class or two…, OR just hire a professional to do the job for them.

    1. For sure. Advertisers are still creating videos as a passive experience where the viewer watches but never does anything. The real art in this situation is to create videos that get people to move. Get people off of YouTube and onto your landing page. Videos that are able to convert the traffic into leads or customers.

  4. Jake, Your absolutely correct. I cost me $6.00 per transaction 6 years ago with Adwords. Now my cost is north of $12. per transaction.
    Much of this is the result of larger companies gaming Adwords through the use of multiple websites that violate Google’s TOC. My main competitor spends 10’s of millions on Adwords, so they are now able to make the cost of Adwords prohibitive.
    Also, many large companies are not able to grow their top line so they are overspending with low cost borrowed money to put smaller competitors out of business.
    It’s a tough time to be a small guy witn adwords.

    1. YouTube Advertising is the Wild West. New online real estate, low competition, and marketing gold to those who are willing to take the risks. In order to be a successful business these days you need to be able to out spend or out smart competition. You may not be able to out spend your competitors, but you can out smart them. You need to hurry though, the west won’t be wild forever.

      1. You actually make it appear so easy along with your prsnoetatien however I in finding this topic to be really something which I feel I’d never understand. It kind of feels too complicated and extremely huge for me. I’m having a look forward for your subsequent publish, I’ll try to get the grasp of it!

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