Why is Adwords King?

Why is Google Adwords so popular as an advertising channel? I have had many people tell me that it is because it is so effective at targeting, and generates a higher return on investment.

It stands to reason...people are out searching for what you're offering at the very moment that you reach them. I could certainly make that argument to a client with confidence.

But then again, where else could the searcher find so many of your competitors all in one place? Does this swim against the stream of relationship marketing at all?

I've had clients tell me that they focus on Google Adwords because its scalable. Someone told me the other day that he could quadruple his registrations overnight with Adwords, if he wanted to.

Really? He could come up with four times as many targeted, traffic-generating keywords and maintain the Return on Investment he has acheived up until now? Does that mean he is currently missing out on optimization opportunities? Or maybe he operates in a world without competitive pressures of supply and demand.

Here´s my theory

We all hunger for instant gratification and total control that Adwords gives us.

We chronically require the soothing gratification of being able to control our actions and rectify our mistakes...because the capabilities of Web Analytics hold our bad Media Placement decisions up for scrutiny.

No more worrying about having to ride out a long-term advertising contract with a third-party supplier that is underperforming

No dabbling in the mysteries of SEO and the hoped-for results that MIGHT materialize at some time in the future. Even if their is compelling evidence that organic traffic is cheaper and more loyal.

Has anyone out there been doing this long enough to remember Flycast?

Well, in the early days of the Flycast ad network, I could manage my own placements site by site, control the cpm I paid on each site, the volume of impressions I was willing to accept (yes, we still paid cpm back then). All through my own handy management application. That was back before Google even took ads.

I loved it. I pitched it to all my clients. Here was a place that I could measure and optimize performance, and demonstrate the results. I could easily demonstrate to my clients how we were saving money. Making them money. Improving their performance all the time.

In those days, keyword advertising was mostly sold on a cpm basis. You signed long-term contracts, and someone else was in control of the level of optimization. Paid search represented a relatively small segment of the market.

OK, so if its all about controlling your ROI in real time, why don´t affiliate programs rule the ad revenue universe?

Again, it´s the risk of exposure. When you get 40 or 50 thousand affiliates signing up for your program, it can be difficult to police their advertising practices. And cleaning up the messes created by overzealous affiliates can be a lengthy process. Not that I recommend avoiding affiliate programs. I love them.

Nor would I recommend avoiding adwords. Now don´t get me wrong. I like Adwords. I love Adwords. Google repeatedly makes me a hero to my clients because I can exercise tight control over advertising, test effectively and scale spending up and down easily in response to the changes in the business climate.

They have done an excellent job of developing tools that are valuable and functional, and their success reflects that.

But I think it is important not to have blinders on about the specific value of Adwords, and SEM in general and its place in the Internet Marketing spectrum. Throwing all of your eggs into the Adwords basket can mean passing up on more lucrative advertising channels in favour of more immediate control.

The powerful analytics applications available on the market increasingly allow us to take the "lifetime value of a customer" view in measuring ROI, and to develop and refine a variety of channels to optimize our returns.

Accepting the Inaccuracies of Analytics Data?

Hurol Inan, on his website Hurolinan.com

posts an article entitled

Best Practice KPI Reporting for the Online Channel

In it, he outlines the four factors to improve decision-making

factor number one: The data the reports are based on must be accurate, and free of bias. KPI reports that rely on inaccurate data sets are not only invalid but also dangerous as they may cause the wrong decisions to be made.

While I totally agree with what Hurol Inan has to say on the subject, I have a couple of concerns.

1. While improving accuracy is important, it is, I think, also important to understand the limits of the technology, and the resultant possibility of inacuracies that are virtually unavoidable. This is the natural result of a distributed tracking system that relies on users accepting our tracking cookies, following prescribed paths within expected timelines, and not confusing our tracking systems by returning to a site multiple times through multiple channels. For today, the best we can do is to work towards ensuring that report users understand specifically what the data represents, and that they understand the limitations and potential for error.

2. Accuracy also depends on the company´s definitions and practices. For instance, if you are running multiple ad campaigns, and a user responds to numerous advertisements before making a purchase, or returns through online ads, once already a customer, how do you properly attribute the return on investment for advertising spend? Having clearly defined and published policies on the hierarchy of tracking events is critical both for measuring behaviour, and communicating to stakeholders - both internal staff and external affiliates.

3. In my experience, too often, there is no common understanding of the specific definitions of the data being tracked, particularly among upper management, advisory boards or investor groups. A plan for educating all users on the meanings, definitions, limitations of dashboard reports and KPIs is critical for establishing the practise of trusting and acting on the data, and acheiving upper management support for allowing KPIs to shape strategy.