The Evolution Of AdWords – Is It The New TV Advertising?

AdWords made big waves last week as they quietly rolled out new a new search results format that has 4 ads at the top of the page and 0 in the right sidebar. Reactions have been all over the place, as you might expect, but the change is here to stay. And, I expect it will become more of the norm for search results in general, not just those with “a deep commercial intent” as currently described for the criteria for no sidebar ads by Google. It is an interesting change, for sure. I wrote about my quick thoughts as to why this is probably happening when the news broke last week. But the implications of this move are a lot bigger than just the loss of some ad space.

As people were talking and/or freaking out about the loss of these ad positions, it got me thinking about the larger picture and the longer game.

A Little History

I have been working in internet marketing, and marketing in general, for a long time. Long enough for me to remember the revolutionary nature of the internet when it came to advertising. Before the web, if you wanted to advertise to potential customers, your options were pretty much limited to print, direct mail, outdoor (billboards), radio or television. The playing field was definitely uneven and favored those with larger budgets. Smaller businesses often had to rely on local print publications or small targeted mailings to augment their word-of-mouth efforts. Only the larger brands could afford to advertise on network television or in big magazines. They had a very distinct advantage over the littler guys.

Then along comes this internet thing and suddenly, even a small business had a real chance at reaching potential customers on nearly equal footing to bigger companies. It was a really exciting time. Put together a web site, stuff some relevant keywords into it and you were off to the races. Even paid search in the beginning was really easy to get visibility. The “management” tools for the early PPC platforms were, to put it kindly, not very sophisticated.

Businesses could make a small investment in digital and see a return. This was when clicks were measured largely in cents, not dollars!

The Current Landscape

Fast forward to today and things look so different! Gone are the days where if you had a decent title tag and focused on a particular keyword you could expect first page Google organic search results positioning. Gone also are the days when, for many, many industries or categories, where you could invest a truly small amount of money into AdWords per month and reap relatively big rewards from the effort.

Costs per click have been rising dramatically for years. In quite a few industries or verticals it is not at all uncommon for clicks to be priced upward of $25, $50 or even into the hundreds of dollars each. This development is not small business friendly, by any stretch of the imagination. These click price points are not just for the types of terms where the advertisers “have the budget” to handle it either. As one example, clicks for plumbing and HVAC terms often start at $30 and can go up into triple digits for competitive terms. That is some serious money for a local business.

Many of the innovations of the past few years by AdWords seem largely aimed at servicing large, national (or even international) consumer brands. When you think about what they highlight at their big announcement events, it is often features or changes that are definitely B2C and almost always geared toward large or national brands. I’m not faulting them for this – it is part of the natural evolution of the system. People were psyched about the possibilities of the internet because it disrupted the old model where you needed big money to have any real kind of advertising reach. Search is just maturing into this next level where it favors the large over the small. From a business perspective, these types of changes are inevitable.

Where Does It Go From Here?

I really see Google creating a clear demarcation in search going forward, with hyper local tools still being reasonable for small businesses and the other parts of their search advertising system becoming platforms for major players predominately. Getting rid of the sidebar ads supports this theory in that exposure will largely now be had by the few (4 to be precise) who are willing to pay up. Hey, Google has earnings to report every quarter and ad revenue is their earnings, so having it stay flat or grow in tiny increments simply will not satisfy Wall Street. They need huge money to make huge money.

I expect this trend to continue with some offerings designed to work with local businesses – like the home services paid listings currently in beta in the San Francisco market getting rolled out to more markets in the coming years. This type of advertising is meant to help address the gap that Google is creating with the rest of their maneuvers in AdWords. On the organic side, they do also seem to be trying to serve relevant results for searches that show matching entities with an implied “near me” like restaurants, spas, auto repair, etc. Perhaps some of these result sets will help to offset the loss of affordable access to AdWords for the smaller players?

I also think that the article from AdWords a few weeks ago extolling the virtues of broad match to capture long tail queries (read my mythbusting take on it here) is also foreshadowing where they want search to go for smaller advertisers. They have to recognize that their platform is climbing out of reach for a growing percentage of businesses. They also have to realize that businesses have more options than ever to use in the digital space to reach potential customers. So what do they do? Encourage these smaller entities to still participate by going after long tail terms instead of even trying to compete on the “head terms” or short terms that are most searched on for their type of business. Why? Because at least for now, those long tail terms are not cost prohibitive for more local businesses.

I am really interested to see how this all shakes out in the coming months and years. Google is certainly not infallible, so if taking this tack does not provide the results they are looking for, they will most certainly adapt or change course.

Love to hear your thoughts on all of this! What are your clients thinking and asking about? What, if anything, are you doing to address these changes with your clients? As always, sound off in the comments or hit me up on Twitter (@NeptuneMoon).

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