Google proves advertising is a worthless activity

Google’s Chief Economist, Hal Varian, has put the proverbial cat amongst the pigeons this week by announcing that it doesn’t matter which position your AdWords advert turns up in – the conversion rate stays pretty much the same. In other words, all the effort to get the copy right, to adjust your advertising bids and to tweak your pay per click advert is pretty much worthless.

Online advertising is pretty much useless

Online advertising is pretty much useless

No matter what you do to adjust your position in Google AdWords, according to Mr Varian, you can’t expect much difference in terms of the conversion rates. However, he misses the point somewhat. If your advert is at the Number One position you are likely to get significantly more traffic than the tenth advert on the page. Even if you convert at the same rates, your Number One advert will have led to more business.

So, once again, it suggests that advertisers have to chase raw numbers. In order to make more money you need to get more click-throughs. Hang on a minute…! Someone from Google, who make their money by getting as many people as possible to click on adverts, is effectively telling us that the only way we can make money from those adverts is to…well…get as many people to click as possible. No point in worrying about conversion, is the clear message from Google, simply get on with getting the maximum number of clicks. Ka-ching…thank you…more dollars in the Google account..!

There is much debate about the mathematics Mr Varian uses to demonstrate his findings. However, his message is clear – conversion doesn’t change very much regardless of where your advert ends up on the page. In other words concentrate on something else….such as getting more clicks.

But worse than this, the examples provided by Google talk about conversion rates of 1%. Indeed, many Internet marketers will tell you that conversion rates of 1% are pretty average. By concentrating on the 1% figure Google’s blog seems to suggest that this is reasonable. Which implies that the Pay Per Click sector accepts that a 99% failure rate is OK.

If your doctor had a 99% failure rate what would you think? if your emails only succeeded in getting through 1% of the time, what would you say to your ISP? And if your car engine only started one in every 100 journeys, would you get cross with your mechanic? In every other walk of life high failure rates like this are unacceptable. Yet, we are seemingly happy to accept that such a high failure rate is OK in advertising.

Ask an advertising agency to tweak your Pay Per Click advert to improve conversion and they’ll certainly do their best. But they’ll warn you that online conversion rates are low and that you shouldn’t set your ambitions too high. So, we just bumble along allowing the advertising industry to continue to charge us for failure.

All that this latest revelation from Google tells us is how inept much advertising actually is. People seem to accept that to make money as a result of advertising is simply a numbers game; get to more people and when you reach enough of them, you’ll get the returns you are looking for. It’s the “throw enough of it at the wall and some it will stick” attitude at play. Google’s Chief Economist is merely confirming that this is true.

However, there is an alternative. Forget advertising. It’s no longer necessary in many instances. In the past, before the Internet, before social networking, before blogs, advertising was a quick way of getting to people, of supporting your brand and generating sales. Now, with a host of online tools, you can reach more people – and get greater connection and buy-in – than you can with many forms of advertising.

Google needs you to desire more traffic – their finances depend upon it. But should you run your business worrying about other people’s finances? By providing “evidence” that effectively makes us want to chase traffic, that’s exactly what Google is asking you to do. Who is running your business: you or Google?

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Graham Jones
Graham Jones is an Internet Psychologist who studies the way people use the online world, in particular how people engage with businesses. He uses this knowledge to help companies improve their online connections to their customers and potential customers and offers consultancy, workshops, masterclasses and webinars. He also speaks regularly at conferences and business events. Graham is an award-winning writer and the author of 32 books, several of which are about various aspects of the Internet. For more information connect with me on Google+
Graham Jones

@grahamjones

Graham Jones is an Internet Psychologist, professional speaker and author of 32 books who helps businesses understand the online behaviour of their customers
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