AdWords Trends

We’ve seen a strong downward trend in the cost per click in Google AdWords starting in January. If your account is still set up for clicks based on the cost per click increases you had to make in September and October to salvage your AdWords business, now is the time to take a careful look to see where you can start trimming back.

Google had a decrease of about 64% in income in the fourth quarter of 2008. The economic stagnation is finally hitting Google AdWords with advertisers moving out of the mix causing profits to fall for Google and impacting the cost per click in Google AdWords. With over 5 years as a professional account manager and managing accounts for businesses in a broad number of sectors, we are seeing several strong trends in activity.

1. The opportunities to drop the cost per click and still retain excellent ad position on AdWords is happening right now. Although this is not across the board in every business, we are seeing a marked trend down in the cost per click needed to retain page position.
2. Although impressions for many accounts still remain high, we are starting to see a drop in impressions for some accounts as a reflection of decreased searches.
3. For our client accounts at this point we are not seeing a marked decrease in conversions. In fact for many clients due to the decreased competition online for clicks, we are actually seeing an increase in conversions.
4. For my own business, I am seeing more clients come in to AdWords for the first time as well as more prospects wanting information or just consulting but wanting to self manage their accounts to keep expenses lean.

My biggest tip on AdWords at this time is to review your cost per click to see if you can start to drop your bid without impacting performance. For some account this means as much as a $1 per click drop and for others we are incrementally moving down at $.05 to $.10 at each review. For some accounts some keywords can go down and other hot property keywords have had to go up in cost per click, but the general marked trend is a downward drop in the cost per click.

If you haven’t read Jeremy Chatfield’s predictions on what will happen with Google AdWords for 2009 I would recommend that you click in to read his blog post on this topic.  I think as Google gets squeezed more by the economic realities of our time, we will see Google try to squeeze more dollars out of each click and work hard to stop the slide in their revenues by looking to creatively increase the cost per click for advertisers. We’ve already seen Yahoo add a minimum cost per click level on many keywords which is simply a bogus “grab for cash” and Jeremy expects Google to do likewise this next year with a big push on using broad match, minimum cost per click bidding, and “spin” on the impact of personalized search.

Jeremy’s been right before particularly on the September 2008 AdWords quality score adjustment. It will be interesting to see how Google reacts as we see an even greater decline in their profits for the first quarter of 2009.