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Tuesday, August 26, 2008

Why Are Small Business Dying in AdWords? Any Solution?

Tuesday, August 26, 2008

Q1: How hard it is to go from $100 a day spend on adwords to $500 a day and be profitable?

Q2: Despite studying hard, you still think most of your AdWords advertising is insanely over-priced. Is Google ripping you off?

Q3:How can you improve my performance in Google Adwords while spending less money…?

Q4:Every time someone enters a search query, there is only room for 10 sponsored ads on the first page. Which ads are they going to see? And what position is your ad going to show up in?

Q5:Would I be wrong to say that increasingly it’s the big brands that dominate search results? I don’t think so?

Q6:Do you think that you will see any small businesses showing up on the first page of Google’s sponsored links? Let me tell you right now you won’t. Why? Because they have already been squeezed out by the big brands.

Q7:Think about what this means for your business. How long do you have before the big brands start bidding on your keywords and squeeze you out of the market? What are you going to do when they come rolling in?

If you don’t believe me, just look at the search query result for “Internet Marketing’.Can you afford to win the top slot position on Google at affordable bidding price? Never! Unless you bid high which is STILL not possible for many smaller companies because budget is constraint.

Survival of the Best Fittest!

Big fish eats small. This is true when small busiess gets ready to win the battle with a list of weaponry keywords only to find their agony.

These days, AdWords is far too big an opportunity to ignore and everyone wants to get a piece of it for themselves. But… the supply of resources has not changed. Let me show you a small piece of the picture.


Courtesy: Michael Reining and MindValley Labs

Remember… this is just a small… in fact a very miniscule part of the picture. Just think about what your niche looks like. How many businesses are you going to be fighting with to get the keywords you want – the resources you need – over the following year… or just over the next few months to come?

Unfortunately for you, this isn’t the only problem you face. As in any other business terrain, the law of supply and demand has been pushing up prices since 2001. While the supply (search queries on Google) has grown, the growth in demand (advertisers wanting to bid on the keyword) has far outpaced the growth in supply with the predictable outcome of rapidly pushing up prices.

Whenever supply exceeds demand, the price will go down.

What does all this mean to you?

It means the keywords that you most likely want are constantly getting more expensive. So now… not only does every other kid on the block run into the candy store… but the price of the most yummiest candy has shot up.

In order to protect Small business from being washed out, Google is consistently changing its adwords algorithm. Introduction of Quality Score is one of the steps that Google use to allure small businesses.

Quality Score = CTR X Bidding Price

This is what I believe the formula of Quality Score though Google AdWords claims to look into other factors as well.

The SINGLE most important factor is to earn a high CTR and the single biggest driver of a high CTR is your ad posit ion…, which initially you can only obtain by bidding high.

Solutions for Small Business

Attain High CTR by bidding high for very specific keywords related to your business. In my previous article I have written why its dangerous for small business to engage in bidding war. Now I suggest them to increase the bid in a way that ensures high CTR during initial phase and then lower the bid once their good CTR history (that Google looks into) is built to continually gain the same slots on Google Sponsored Links Page.

Once you gain good CTR history that Google looks into, try to lower the bid to still enjoy the top slots but Remember, be volatile, mobile and dynamic. You need to constantly refine, redefine, and redesign. Unfortunately, its’ a never ending battle for small business. One who has stamina to continuously fight with big players in adwords market, they are ultimate WINNERS!

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