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BusinessWeek: Search Ads Getting Too Pricey

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In the February/March editon BusinessWeek's SmallBiz publication, Robert Hof reports a "fallout from a new online ad rush" where commerce giants are increasingly muscling out smaller businesses from the ad pool.

Hof's article (available by subscription only) is mostly a rehashed subject on bigger chain businesses getting more into PPC search ad space, doing large-scale keyword buys, driving up prices that either push out smaller businesses that don't do research and monitor advanced search terms, and companies mulling either diverting resources to other online areas or going back to traditional.

Examples listed of small-to-medium size online retailers (around a hundred employees) with PPC busts include BabyAge, Ice.com, and eBags. Also quotes DoubleClick statistic of a 31% average price jump in the 3rd quarter of 2006 from the previous year, but does not specify if that figure relates to the entire PPC industry or just for these selected businesses. (BabyAge mentioned an 80+% increase over last year for their own 'favorite keywords.')

Hof writes that one solution for advertisers is "buying far fewer keywords and phrases," and listing specific product names that are less pricey. However, he fails to make the distinction between quantity and quality, just assuming that less keywords is the solution. Less may be better for some after seeing which keywords have the best ROI and eliminating the poorer performing ones, but there are many specific product terms that can be even more pricey than general ones, based not just on popularity but on what the PPC engines know what they are worth to entreprenuers. (Which is why even starting bidding is considerably higher for some terms than others.) Hof also fails to mention the strategy of tail-end searches, which can yield more overall traffic – when going deep enough – (and considerably better ROI) than general terms.


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