[Editor Note: Starting this week, Dave Collins, noted UK micro-ISV marketing expert, will be sharing his considerable expertise on marketing, SEO, Google AdWords and more here. I first met Dave at ESWC06 and was awed by his wide-ranging knowledge of AdWords and how to make it work for micro-ISVs. Dave’s company, Shareware Promotions, has helped many, many micro-ISVs break through. This is the real stuff. And by the way, catch this week’s The MicroISV Show podcast in which Michael Lehman and I interview Dave.]
By Dave Collins
Founder, Shareware Promotions
It doesn’t take a genius to notice that PPC has now become the norm in online advertising, and that Google AdWords has become the king of that particular hill.
Because of the very nature of what the system is and how it works, small and large companies alike are using it, yet the startling fact is that most are using it quite badly.
A few years ago, chances are that only a very small handful of your competitors were using AdWords, but that’s changed now. Today you can count yourself lucky if any of your serious competitors aren’t doing so.
Meaning? More competition, resulting in it being increasingly harder and more costly to maintain your prominence and a good ROI.
In 2005 Google quite radically changed their system, and introduced what they called the Quality Score. I have to admire the concept, as it basically allows Google to clarify how their system works, without giving away a single piece of new information. Not one.
However, beneath the Quality Score system lay a fundamental shift from brain to brawn, that many have overlooked.
Under the old system, you basically had to work quite hard to effectively maintain your hold above your competition. Google lovingly described it as “relevance”, but from their point of view they could just as easily have called it profitability. Itâ€™s to Googleâ€™s credit that the two are interchangeable.
But then something important changed. The number of people using AdWords grew at an amazing rate. Google realized that it was time to change the rules.
The Quality Score system allows the advertiser to choose between two means of raising their ads to the top of the pile.
Skill or budget.
In a marketplace shockingly devoid of advertising skill, guess which one usually wins? In other words, why invest so much time in acquiring and refining new skills, when you can simply buy your way in?
Interestingly, many software and shareware developers choose a third option.
Cowering in fear.
They don’t want to spend more money, and they simply don’t have the time to learn new skills.
If reading this is making you nod your head in agreement, then keep going. There’s more to come.
It’s also no coincidence that Google are developing their system; changing the setup, renaming their tools, modifying the terminology and altering the rules and techniques on an ongoing basis. Doing so has two immediate and highly profitable consequences:
It perfects and improves the system. Cheers all round. But who’s cheering the loudest?
It also makes it even harder to perfect the skill.
Wait. Don’t dismiss me as a Google Conspiracy Theorist. I’m not.
But bearing in mind the two options for Google AdWords success (skill or spend) you don’t need to be a genius to understand that the more you know the system, and can work it to your advantage, the less you have to spend.
Ask yourself whether it’s in Google’s better interests to simplify or complicate the process. They’re in it for profit. And so are you.
Let’s take this from theory to the real world.
My experience in working with companies using Google AdWords has been that many use the “gut instinct” approach when it comes to evaluating their success.
For example, they decide to throw a small budget at it, perhaps $1,000 per month. Even without digging too deeply they can see that this brings in good qualified traffic, and when they last did their maths (possibly years ago), they estimated that they probably make around $1500 a month in sales from Google AdWords.
So they’re happy. They spend $1,000 and make $1,500 in return.
And they’re right. The figures add up.
The problem is that they may also making a very serious and costly mistake. This scenario is far better for Google than them.
The fatal error here is to assume that $1500 in sales comes from $1000 in expenditure. But the $1500 in sales may be generated by as little as $250 in effective advertising. The other $750 goes straight into the bin. Or Google’s pocket. Depending on how you look at it, or who you work for.
In other words, if you can identify where you AdWords account is effective, you can cut down on all the fluff. In this particular case, the fluff costs the company $750 a month. Identifying it could allow them to still make $1500, while only spending $250.
So avoid the cardinal sins of Google AdWords.
Never let an account run itself. This is great for Google, but can be disastrous for your ROI.
Conversely, donâ€™t over-manage a Google AdWords account. Youâ€™ll drown yourself in data, and valuable information will be dragged below too.
Never let gut instinct rule over factual data.
Never forget why Google are doing this.
Your relationship with Google can most definitely be a long, prosperous and symbiotic one. But there are too many small companies out there who are paying far more than they have to. Don’t be one of them.
Dave Collins is the CEO of SharewarePromotions http://www.sharewarepromotions.com, a well established UK-based software marketing company. Dave specialises in Google AdWords, Log Analysis, Online Marketing and Delegation.[tags] Dave Collins, micro-ISVs, AdWords[/tags]