Paid search is too cheap

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Paid Search Is Too Cheap!

By: Joost de Valk
2007-02-09

I was at the Dutch Search Marketing Congres yesterday, quite a nice day and I had some fun talking to other people in the business.

One thing annoyed me though: some folks kept whining that AdWords was getting more expensive every year What annoys me most is this: someone will come up to me, well talk a bit, and hell tell me that offline he pays 80,- for a lead, and using AdWords their cost per lead is 12,-. He was profitable with both, but of course he preferred the AdWords leads.

After telling me that, and me congratulating him on his nice way of using AdWords, he starts complaining that AdWords prices keep rising Now, if you can be profitable with a cost per lead of 80,-, chances are, someone else can too. So someone will start bidding more for the same keywords, getting a cost per lead of 14,-, and still make money. You will start bidding higher, etc. etc. etc. get it? You know what thats called? Economics

If you cant make a profit from it anymore, and someone else can, youre doing something wrong. Thats why you shouldnt just throw money at AdWords. You have to digg deeper in your stats: how much clicks do you need to get a new client, where are you losing people that come to your site etc. etc. If youre the best at doing that, youll find that in the end you wont mind paying more, since youre still making a profit. If you cant do that optimisation yourself, hire someone to help you with it. In the end, it will earn you money.

Thats the principle of a free market economy: people will keep entering the market, until just costs are covered, an no profit is being made any more. The message: get in to AdWords while its still cheap, have fun with it, and learn from it. But dont whine about prices going up, as long as youre still making a profit from it.

Note: Im not the first one to say this, Danny Sullivan has been saying that search is underpriced for quite a while, as you can see on this report on SE Roundtable, amongst others.

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About the Author:
Joost de Valk is an SEO from Nijmegen, the Netherlands, who works for Onetomarket, an online marketing company. He has experience as a sales manager for several IT companies, is involved in open source projects like WebKit and Mozilla, and is the creator of the biggest online resource on CSS3. Joost blogs about web design and SEO, and writes all sorts of scripts for webmasters.


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