Less Well Targeted Traffic and Rapidly Escalating AdSense Costs

Despite the fact that AdSense is becoming noticeably less effective, people are still clicking in big numbers.

However, most worryingly for anyone considering spending money on AdWords advertising, growing evidence suggests they are not converting as much. In other words, yes, people still click, but then they do not buy.

As suggested earlier, click costs for AdWords advertisers have gone through the roof in the last couple of years.

Like business people anywhere, online marketers must balance their expenditure on advertising against the quantifiable effect on sales.

So, it is not unreasonable to assume that with costs climbing much more quickly than sales in most industries and businesses, some companies will have little choice but to reduce outgoings by slashing their advertising budgets.

And the problem is that the nature of AdWords really prevents any major reductions in prices soon, because, in a situation where the value of a specific advertising keyword is decided by a bidding auction, then each word is naturally bid up as necessary.

So, it is the buyer who is driving the prices higher and until people actually stop doing so, there can be no fall in prices. That is certainly not noticeable yet.

And, of course, the businesses and people that suffer most are the smaller operations and one man bands.

They are the ones that will quickly realize that they cannot hope to outbid the bigger players, and they will just drop out of the PPC market altogether. This is very bad news in the long run for the whole PPC industry and especially for the market leaders over at Google.