Paid Search Ads Can Actually SuckWritten by Michael Levanduski
March 13, 2013 # 3:31 pm # Marketing Insights, Specials # No Comments
Everyone loves Google, or at least is seems that way. Google has come closer to conquering the web marketing business than any other company has been able to. Since their very beginnings in web marketing though, Google has been known well for their paid search offerings. These paid search ads were relatively affordable for a broad range of marketers, and they were effective at meeting their purpose. This is still the case to this day. Well, that is of course for most businesses. On the other hand, there are companies like eBay. The all famous online bidding and retail company has just recently realized that they really don’t need Google’s paid search ads at all, but rather they need not pay anyone to get people visiting their website.
Ray Fisman, of the Harvard Business Review Blog Network, writes in an article all about recent results from a study by eBay Research Labs economists Thomas Blake, Chris Noskos, and Steve Tadelis. In this study, eBay took a look at their sales during two separate scenarios. First, the team analyzed the company’s sales while running a paid search campaign with Google. Next, they looked at the sales numbers after stopping the purchasing of paid search ads with Google and search engines all together. The results were as follows; “many paid ads generate virtually no increase in sales, and even for ones that do, the sales benefits are far eclipsed by the cost of the ads themselves,” as it was written in Fisman’s post.
Taking a look at the actual report itself from eBay Research Labs, here is what they wrote;
It is our hypothesis that users searching for “eBay” are in fact using Google as a navigational tool with the intent to go to ebay.com. If so, there would be little need to advertise for these terms and “intercept” those searches because the natural search results provided by Google will serve as a perfect substitute. To test this hypothesis, eBay halted advertising for its brand related terms on a smaller search advertising platform (MSN). As suspected, almost all of the forgone click traffic from turning o↵ brand keyword paid search was immediately captured by natural search traffic from the platform, in this case Bing.
The facts that came of eBay’s research make it seem like this idea is something that everyone should have already realized. At least, that is, those businesses on the web that are well known across the country and the online community. Companies like Dropbox, Amazon, and even Square are all examples of what eBay’s research is trying to explain. With all of these websites, when their names are typed into Google’s search bar, a paid ad appears directly above an organic search result with the exact same link destination.
Now this is not the case for all businesses, of course. However, the bigger businesses on the web, and even some of the smaller are spending far too much money on Google’s paid search, even though they may seem like they are working quite well. There are many out there that should continue to trust Google’s paid search ads to bring in the traffic, but those who don’t necessarily need the help are still paying for it.