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Last year in 2013, over 85% of Google’s revenue came from their AdWords platform. When you consider that their total advertising revenue for that year surpassed $50 billion, that is a very significant figure.
What this tells us is that paid advertising isn’t going away any time soon. Platforms such as Google AdWords are going to get more aggressive in their marketing approach to enable them to continue on their current growth path.
Today, I spoke at the Search Congres event in Amsterdam on this very subject. My slides are available here and I have also written up the slides in an article format for those of you who prefer to read the background rather than look at slides.
This graph shows you just how much Google’s advertising revenue has increased since they launched AdWords back in October 2000.
Interestingly, the average Cost per Click (CPC) has started coming down over the past few years which indicates that it is the sheer volume of advertisers that is helping their revenue grow at such a high rate.
As I mentioned above, Google launched AdWords in October 2000 and when they started, they only had 350 advertisers! This has grown exponentially over the last 14 years and I can’t see that stopping any time soon.
When you compare the search results from then to now, they are very different. In the year 2000, it was very clear where the paid adverts ended and the organic listings started. Flashing forward to the year 2014, this is no longer the case. The lines are definitely blurring and it is getting harder to see what is an advert and what is not.
The world is catching on to paid advertising and the money that can be made from it which is why we are seeing a lot of other players in this landscape. Google now has competition which they did not have before.
Other search engines also offer a similar service. For example, Bing Ads works in a very similar way to AdWords with a lot of the same features.You can even import your AdWords campaigns directly into Bing and with a couple of minor changes, be up and running very quickly.
Social Media networks such as Facebook, Linkedin and Twitter are now also offering paid advertising on their platforms. The difference with Social Media networks is that they know a lot more about us personally and therefore, adverts can be more targeted to us as individuals.
Facebook even hired Sheryl Sandberg who was the key person at Google spearheading the AdWords revenue channel. When Sheryl joined Facebook the goal was for her to monetise the Facebook platform; something that she has done a very good job of in my opinion!
We then have the content platforms capitalising on paid advertising but they have it under a different name; native advertising. You can now pay platforms like Stumbled Upon and Taboola to get your content seen by relevant people, paying each time someone clicks on the links.
I am sure that the graph below speaks for itself. With around 69% market share, Google are the Search Engine Giant.
The second reason that I think we all use AdWords is because Google really stay on top of the market, their audience and their requirements. As such they make a lot of changes to their AdWords platform every year. In 2013 alone, they rolled out over 1,000 changes to the AdWords ecosystem. When you put this into context, this is almost double the number of changes they made to their organic algorithm.
A lot of the changes they make are very helpful for us as advertisers but we always need to remember why Google make a lot of these changes:
Some of the changes they make really do surprise advertisers and occasionally have us in uproar as we know that the change is not going to benefit their customer, it is going to cause advertisers to spend more money.
An example of this was when they rolled out a change saying that they would be stopping adverts from rotating indefinitely and that after 90 days, the ad that Google AdWords deemed ‘the best performer’ would be shown.
There are even petitions from advertisers campaigning for certain updates to be reverted. In some cases, Google do listen but in the majority of cases, they don’t.
Over the past 12 months, we have seen a lot of changes that are very significant within the AdWords ecosystem. I have listed a few of them below but there are a lot more. If you want to stay up-to-date with all the recent product launches, the Inside AdWords blog is a must to follow.
Remarketing Lists for Search Ads
This feature allows advertisers to customise their search campaigns so that people who have already visited their site can have ads and bids tailored to them when they search again on Google. You can read more about this feature in a blog post my colleague Tara West wrote earlier this year.
Google realised that they were behind the times when it came to displaying adverts dynamically depending on what visitors viewed on a website. There were other competitors in this field such as Criteo and AdRoll, but now Google have released an update that allows you to do just that; create highly targeted adverts for individual visitors. Read more on the AdWords Help Site.
Close Matching Variants
This is a feature that advertisers did not like. What used to be an exact match keyword is no longer an exact match keyword. Instead, Google will now be showing your adverts for other words/meanings that closely match that keyword. For example, if you are bidding on ‘Central Park New York’ your ads could show for things like ‘Central Parking New York’, ‘Central Carpark New York’, ‘Central Par New York’. Search Engine Land covered this story perfectly here.
Product Listing Ads (PLA) Diagnostics
With Google placing a lot of emphasis on Product Listing Ads (PLA), they are launching updates to this section of the AdWords ecosystem more frequently. The diagnostics centre offers advertisers a central location where they can check the health of their PLAs allowing you to prioritise key issues and ensure that products are back online quickly. More on the Inside AdWords blog here.
Promotions in Product Listing Ads (PLA)
This is one of the more exciting updates within the PLA channel as advertisers can now show promotions, discounts and offers alongside their PLAs in the search results and shopping results. This can lead to an increased Click through Rate (CTR) for merchants as it makes your listing stand out in a crowd. Read more about the update and how to implement this here.
Custom Affinity Audiences
When you use Remarketing or Display Advertising with AdWords, you can really narrow down the criteria behind who gets to see your adverts. This has now been taken one step further with Custom Affinity Audiences which gives you the flexibility to reach the exact audience you are looking for as you decide who to reach. You target people based on their interests and sites related to their interests. Read about the different targeting options here.
The answer to this question is a lot! Going back a couple of years, there used to be a clear divide between SEO and PPC teams but as the lines are blurring in the SERPs, it is becoming more important that we all talk to each other.
Just take a look at how identical these two listings are. The top one is a paid ad and the bottom is an organic listing, they are so alike!
What’s even more interesting is that the results from a survey published on Econsultancy showed that 36% of people still don’t even realise that Google ads are actually ads. This is such a high number and just goes to show that if we only focus our attention on SEO, we will be missing out on a lot of traffic and at the end of the day, sales and revenue.
There was a study published on Think With Google back in 2012 (I imagine the results would be even higher now given how much the paid and organic listings look alike) that showed what happens in the absence of paid ads. Interestingly on average, 85% of traffic is lost and not recovered by organic clicks!
We also need to remember back to the time when organic keyword data was readily available in Google Analytics. I don’t know about you, but it is crazy just how quickly that lovely keyword data has been replaced with (not provided) in reporting. This is only going to get worse too.
If you do PPC you can get so much data on the performance of keywords and those findings can and should be applied to SEO. You might have a keyword or product you want to push and see what it does. Launching a PPC campaign or ad group with your existing campaign can give you almost instant data. If that product performs well on AdWords, then you know you should also be investing on SEO to take a two pronged approach at it.
AdWords also links up with Google Webmaster Tools so you can see how your paid ads are performing for a keyword compared to your organic listing. I do find this a little strange given that the data has been removed from Google Analytics and added to Google Webmaster Tools in a different format, but hey, I am not going to complain! This is an example of the report and the data you can see.
Brand Centric Search is something that we always talk about at Koozai and it essentially means that your brand is at the heart of everything we do. By utilising SEO and PPC together, you can dominate Above The Fold. Checkout this screenshot for a search on Expedia; this is what I am returned with above the fold. I don’t even need to scroll down, everything about the brand is in front of me.
If you only focus on SEO or only focus on PPC, you are missing out on a lot of real estate that your brand can be taking up. Worse still, if you only focus on one channel, your competitor could be appearing above you!
I have two predictions with a few side line predictions:
Have a look through my slides (60-80) for more in-depth information on these predictions and where I think PPC could be headed. The rest is yet to be known but I know one thing, I am excited to be in the paid advertising industry as we move into 2015 and can’t wait to see all the new things that get released by Google and the other paid advertising platforms.