Google AdWords Changes Cause Sweeping Impact in Cost Per Clicks

In the second week of September, Google AdWords rolled out some big changes. Some of the impacts of these changes are just now beginning to be felt by many advertiser accounts.

First, what Google did was to do just a few important tweaks to their highly profitable ad delivery system called AdWords. Here the changes are in a nutshell.

1. Keywords are no longer marked “inactive for search” – Google now allows all words to be shown in the search index and will deliver clicks based on quality score, bid price, and daily budget.

2. Quality Score is now more accurate – Google has stated that they will evaluate the quality score as the search query is entered.

3. “First page bid estimates” replace “minimum bids” – Google also said that they would start showing information to help advertisers know how much to bid for certain hot property keywords to appear on the first page of the search results.

What has happened in accounts, as of this change, has been broad and sweeping. The change has particularly affected advertisers in major market such as Los Angeles, Washington DC, New York City, and San Francisco, just to name a few. The change has been pretty striking in regards to increasing the cost per click, as much as a 35% and sometimes even more to have specific hot property word appear on the first page of Google search results. This impact has been felt particularly on “Poor” quality score rated keywords, but even keywords with an “Ok” rating.

What I have seen just a few days after the AdWords rollout was a striking drop in average ad position across the board on many accounts in many diverse business sectors in major metropolitan markets. Typically we like our client’s average ad position to be from 2 to about 6; depending on the client’s daily budget, the importance of the keyword, and the price to be competitive with the market competition. We saw many accounts which had been operating at this level suddenly have an average ad position drop to an average position of six to nine or lower. We have needed to adjust the maximum cost per click in many of these accounts; fattening Google’s pocketbook and stretching the client’s budget to the limit.

Many smaller markets such as Cincinnati, Ohio; Louisville, Kentucky, and other similar markets have not really been impacted by this recent change. However, the major metropolitan areas have been hit hard. What I found even shocking, as a professional account manager, was some of the notes on what Google recommended that the advertiser pay to appear on the first page of Google search results. Just one example is for family dental care (for the Washington DC metro area) the bid was $57! I do want to make sure to caution clients, who self manage their Google AdWords accounts, to be careful on upping the ante to these recommended figures. Remember, Google is in this to make a profit, this tactic may be considered “up-selling.” This is also a good time to evaluate the quality score of a keyword and to pause or delete those keywords that may be sapping your program’s health.

What I found interesting was that for many of the keywords where Google suggested a huge increase such as $15 to $26 PER CLICK to be on the first page of search results, the monthly figures showed that the keyword already had an average position of 2 or so at a figure of around $6.50 per click and in some cases have a quality score of “Ok” and a decent click through rate. In one specific case, the maximum cost per click was set at $12.00 but the actual cost that Google billed was $2.02. Remember, the client whose ad appears in the number one position is definitely being charged $12.00 per click by Google as they are the price leader.

Here are my recommendations from about two weeks worth of careful review of many Google AdWords accounts.

1. If your budget is under $500 for clicks per 30 day period translating into an figure under $16.67 per day, you really must consider increasing your click spend in order to get in the game. If you really cannot increase your spending level then you should only run one or two ad groups in your account. You can identify if you have fallen out of the competitor mix by reviewing your ad spend. If Google has not been able to spend your monthly budget for clicks, then your cost per click setting is too low and you will not garner the impressions needed to make your AdWords advertising program successful.

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How Has The Economy Affected Your Business?

Has the blow-back from the US economic crisis affected your business yet?

If so what pull-back approach are you taking?

Are you cutting advertising as a result of efforts to trim costs?

Have your client account payments been affected?

These are just a few of the questions that small business owner such as myself and my clients are discussing. I had one client tell me that his own client base had just simply stopped paying on time. We have experienced several client situations where we have had to turn client accounts over for collection for the first time in eight years.

In a tough economy, such as ours, it is important to keep a cool head and focus on your business longevity. Many of us will be able to weather this storm and come out stronger, unlike some industries such as the real estate and the mortgage industry, where the crisis is so deep that some firms are being driven out of business.

So what do you do when times are tough for your business? One quick comment, it is not the US alone, but a global issue. I have chatted with several contemporaries in Spain and the United Kingdom who are experiencing many of the same issues that we are in the US in regards to draw-down and pull-back.

This is what my firm is doing:

1. Getting very proactive with slow payers to bring them into line with our payment terms.

2. Working with a collection agency for the first time in eight years to collect accounts over 90 days old.

3. Reviewing carefully our spending history. This is not necessarily a time to just routinely upgrade software. I have purchased some upgrades but made very careful selections, but others, I will defer to later or indefinitely.

4. Carefully reviewed my business profitability. If I cannot offer a service profitably, I have dropped it or realigned it to be profitable; factoring in the cost of credit card processing and overhead has been extremely important in some of my most recent decisions in regards to pricing models.

5. Stopped doing business with clients that simply will not pay on time and sap my available time with collection efforts.

What have you done to keep you business afloat in these trying times? Click add your comment below and leave me a note. I would be most interested in hearing what you are doing to move your business forward.

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Domain Name Ending School

The most popular domain name endings are .com, .org, and .us. But most of us without thinking will enter .com if we do not know the ending first. But did you know that the endings are actually meant for certain business sectors?

.com is for anyone

.org is typically reserved for non profits

.net is typically reserved for Internet communicators firms and telecommunications

However with the glut of website all this has been turned on its ear when a business cannot find its name in it preferred .com state. If you choose a domain ending other than .org and you are non profit, will you get a legal note demanding that you change. No, of course not, but I recommend that you check first to see if you can find your domain name with the correct – best business practices ending first, and then look outward to other domain name endings.

If your domain name is not available as a .com, I suggest considering the .us (if you are a US business), a .biz, or the new .pro (if you are a lawyer or other licensed professional). It is always best to try to stay within ICANN guidelines on domain names, but with the few .com’s that are still available you may need to consider branching out.

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AdWords Escalating Costs Force Advertisers to Yahoo

With the cost of Google AdWords for some markets and business escalating since the AdWords September 15th update, Yahoo is looking better all the time.

Here’s just one example of the many changes that we have seen happen this week since the September 15th AdWords update:

1. For bed bug extermination and bed bug related keywords in 2006 we paid around $1.25 per click, now to be competitive in the New York City market we are over $4.00 a click. Yahoo is still serving quality converting clicks for this account at about $1.65.

2. Here’s another example of the competition on AdWords since the update. For a dentist in the Washington DC metro area, Google states their account control panel that to appear in the firs page of search results they should now pay $57 per click for the phrase family dental care. Mind you, this is not to be in position one, but rather in position 11. What I don’t understand is that this same client has been getting clicks with Google showing the average ad position to be over 6 in the data and he is paying around $7 or so per click – so why the $57 note in the control panel?

3. Some accounts that we manage are totally being hammered with the update. One client who typically gets 70 to 80 conversions from Google each month is down to 20 so far month to date and we upped his cost per click twice since September 15th! Yahoo has brought in 16 conversions for him so far this month and at a significantly lower cost.

Yahoo is looking better all the time. In fact if you are not seriously contemplating advertising in Yahoo and trimming back your advertising in Google AdWords while this shakedown is occurring, it may be a good time to give it very serious consideration. I think that Google may have gotten too greedy in this last change and will be chasing out advertisers with these new cost per click figures to retain their desired average ad position.

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Getting on the Blog Band Wagon

If you have a website and do not have a blog, it is time for you to get on the blog band wagon. Savvy search engine optimization experts have been recommending blogs for the past year, but we know that a blog does a lot more for you than help with search engines.

Here’s why at McCord Web Services, we’re so bullish on blogs:

1. Blogs bring and build website traffic.

2. Blogs increase the stickiness of your website.

3. Blogs add new fresh content to your website – if your blog is posted under your domain.

4. Blogs build contextual authority on your topic for your website in the eyes of all top three search engines.

5. Blogs build topical entry pages that are keyword dense and on one topic that readers can use to find you and your services.

6. Blogs build interest with readers and can operate as a point of interaction between you and prospects.

7. Blog comments can build controversy and discussion on your selected topics where an open exchange is allowed.

8. Blog interaction, comments, and traffic let you know clearly the topics that your audience is interested in knowing more about allowing you to shape your services and products to your visitors needs.

9. Blogging is a very effective way to become different from your competition.

10. Blogging allows you to put a personal face on your business and to connect with others in a productive and interesting way.

You can review our white paper called “The Tangible Benefits of Blogging” or more really in-depth information.

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Peachtree Complete Accounting 2009 – A Winner

I have been using Peachtree Pro 2008 since April. I love the software and find it easy to use. By implementing an automated accounting and billing product I have streamlined my operations and have gained much more time to grow my business.

Just this week, I upgraded to Peachtree Complete 2009. I opted to upgrade to 2009 so that I would have the ability to run reports from any year range that I wanted instead of only a two year period. I opted to upgrade from Pro to Complete because with the $140 discount I got from Staples on the Complete version I was within dollars of just upgrading to Peachtree Pro 2009.

The reason for this post is to let you know what a time saver for me one of the features that Peachtree Complete has that Pro does not – Time Billing. Now I can track, notate, document, and bill my time without using a timer, a log sheet, or even creating a new invoice. I can do it all from the Time Billing interface.

I have to tell you that for my business web services – which is built around billing customers for time I expend on projects, this is a huge time saving improvement. I believe that I will be able to even increase my profitability by accurately logging my time on phone calls and email correspondence for clients with the integrate timer. But it is the integrated time logging and then customer billing that really has me going. Wow, I just cannot begin to state how effective this will be for again streamlining my business billing processes.

If you are like me, the majority of your income comes from time you bill clients, you need to automate this very important part of your business. As for me implementing Peachtree Accounting software was one of the very best things that I did this year. Not only do I have a better handle on my business and its profitability, but I have been able to minimize the time I spend on accounting and paperwork to run my business to doing the things I love which are selling and providing my services.

One quick note, I am not being paid for this review in fact Peachtree doesn’t even know I am writing it. I just wanted to share with you one of the great features that I have found and why I am so glad that I upgraded from Peachtree Pro to Peachtree Complete 2009.

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