Paid search initially was a great invention to advertisers, as it has become one of the major channels in marketing your products or services online. Over the recent years PPC experts have been emerging from all over the world. PPC has therefore become an occupation of its own.
However, competitions in the pay-per-click industry have become tougher over the years. I expect everyone in the field will encounter more serious challenges in 2007. Here are the 5 reasons.
Reason #1: People tend to move towards where the money is
By looking at Google’s increasing revenues from its successful paid search platform Adwords, people could get false impressions. They often think by understanding some basic tricks on PPC and by investing a fairly small capital, they will make huge profit from their investment. However the truth is that there could be many advertisers trying out on paid search, and only the ones who truly understand pay-per-click will make profits consistently.
Reason #2: Bid management systems are getting smarter
You may find your competitors are catching up on you by using improved bid management systems, whether the tools are on subscription based or self-developed.
The major PPC search providers (e.g. Google Adwords, Yahoo! Search Marketing, MSN Adcenter, Baidu and even Ask.com) have all included click-through-rate (CTR) in their ranking algorithm calculations. Due to this reason, old PPC systems will be re-developed and upgraded. It is generally very expensive to create your own technologies, but serious companies in paid search marketing will invest more on either developing new systems or polishing their existing bid management tools.
Reason #3: Your competitors have gained experience
Now your competitors have smarter systems, they will then hire experienced and smarter PPC experts. Great strategies and decisions can only be made by smart experts. I have never seen a single paid search campaign completely relying on the computers to make decisions, not even when the algorithms are perfect.
Reason #4: Keyword click price inflation is to continue
The cost-per-click (CPC) prices on most of the competitive keywords are still to raise. This is caused by the effect of bidding wars from many advertisers, without any desire to be cost effective and competing in the same “keyword” space. These are the few of the many reasons that CPC prices will raise:
- Marketers who have large budgets and do not have to watch the revenue on investment (ROI).
- Brand marketers who simply bid high to protect their brands.
- Advertisers who are required to reach some seasonal sales targets.
- Multi-channel retailers who are selling from both offline and online.
Reason #5: Click fraud
Click fraud has always been a big concern to the entire paid search industry, and it is happening all the time. It will cause you a great deal of advertising budget, if you don’t watch out for it!
Major search engines do have their own ways to prevent and detect click fraud. However, they will not disclose these methodologies to prevent the real click fraudsters from easily finding ways around it. There are other ways to spot click fraud to some certain extends.
Advertisers can always try to ask for refunds from search engines provided they have submitted solid proof of evidence. However, many in-house PPC managers are reluctant to do so, as their campaigns lack a comprehensive click fraud detection system. In this case, they may want to seek help from companies that are specialized in managing paid search campaigns for clients.