Does Google AdWords work? There’s a story making the news this week about how eBay supposedly wasn’t able to make paid search work for them so they stopped using Google AdWords. Ray Fisman, who wrote up the study for Harvard Business Review, said “Their findings suggest that many paid ads generate virtually no increase in sales, and even for ones that do, the sales benefits are far eclipsed by the cost of the ads themselves.”
I couldn’t help but laugh when I read this, and I’m sure many of you did as well, because it’s pretty well-known within the search engine marketing community that eBay is the butt of many jokes when it comes to adopting advertising best practices.
eBay is probably the world’s biggest abuser of an ad writing tactic in AdWords known as Dynamic Keyword Insertion or DKI. As its name suggests, DKI dynamically inserts the user’s query into the headline of your ad, as follows:
When used correctly, DKI can be a highly effective ad writing technique. But when employed in the way that eBay uses it, the results are disastrous.
eBay’s AdWords strategy appears to be to pick every possible word in the dictionary and run them on Dynamic Keyword Insertion. For the last 10 years or so, they’ve been running ads on the most ridiculous things including stuff that doesn’t exist or stuff that is illegal to sell. Here are just a few examples:
Need a Perpetual Motion Machine? Shop on eBay and Save! Discount Perpetual Motion Machines!
Feeling lonely? Need a wife?
Or maybe you’re looking for love in all the wrong places?
Or how about some slaves or Bill Gates while we’re at it.
I could go on but I think it’s safe to say that if you’ve used Google in the last 10 years, you’ve come across a bunch of bizarre eBay ads that make absolutely no sense. So I can’t say I’m shocked that they finally realized they weren’t getting ROI from AdWords.
The problem with eBay’s carpet-bombing ad strategy is that it’s doomed to fail. The way AdWords works is that they allow companies to pick what keywords they want to show their ads on.
Now to ensure that advertisers do a good job at choosing keywords that are relevant to their business (which is important because Google would prefer not to display stupid, irrelevant ads, which annoy users), they give you a discount on ads that have high click-through rates. The flip side of this is that they penalize lousy ads (like ads for slaves or loneliness, etc.) by charging as much as 10x more.
Furthermore, because your ads are so weird, if someone clicks on the ad and goes to the site – they’re not likely to find what they’re looking for (no perpetual motion machines in sight), and won’t convert into a sale. So eBay was paying a high premium for mostly worthless clicks.
These and other factors likely explain your study results. I’m sure Google LOVED your business, but of course you weren’t getting return on that misguided advertising spend.
So eBay, I hope you can see that it’s not AdWords – it’s your dumb ads that are killing your account.
Success at paid search is possible but you’ll need to invest more time than just creating one universal ad template then jamming every keyword in the world into that one ad using dynamic keyword insertion.
I’ve been doing paid search for 10 years and have made it work for thousands of businesses, and I’m absolutely certain I can make it work for you, too. Here are a five free tips for you:
The first 5 tips are on the house. John Donahoe, your AdWords account managers are an embarrassment to your company and your AdWords account is in shambles. Call me and I’ll turn your Google PPC account around for you!
Hit me up on Twitter:
Please read our Comment Policy before commenting.