The Death of PPC?

When a giant like Google slaps those who’d been feeding it since it started making money with Adwords and Content Ads (Adsense) it means one of two things: either they are losing ground to other search engines due to the low quality of user experience with paid ads, or they’ve found a huge source of income that Adwords revenue dwarfs next to it.

I have my reasons to believe that it’s both. The millions of annual spending of individual affiliate marketers are not stable, and are declining anyway (as will be explained in a minute). Compare that with fixed advertising budgets from big brands whose advertising aims mostly at branding and not at  making direct sales.

Due to the shrinking of profit margin expected from direct sales generated through Adwords more and more affiliate marketers are dropping the ball, and others are shifting their advertising budgets to other more reliable and profitable sources. And this very same shrinking is caused by Google itself. Here is how:

To get lower cost per click with Adwords you need a higher quality score, which in turn depends on several factors including the click through rate on your ad. Recently, the average Google searcher started to pay little to no attention to the sponsored links. This only means lower click through rates and consequently higher cost per click due to the low quality score caused and given by Google!

That only means one thing; the battle for the next several months will be in the SEO zone, where every one wants to get as many organic clicks as possible because this is where the average Google users shifted their attention to.

The first half of 2010 witnessed the release of tens of high ticket, as well as low ticket, paid traffic guides and courses. The target of those courses was the ex-Google Adwords users who lost their accounts in the late 2009 slap. Makes sense?

Now as it became obvious that Google is losing the PPC battle due to the natural development of user behavior (which is pretty predictable and I don’t know how in the world a giant like Google, with 50+ PhDs and a huge army of grad students, is not prepared for it) I expect tens of SEO courses and services, both in the high and low ticket zones, to dominate the marketing arena at least until the end of 2010.

The question is: Since PPC traffic is declining and SEO is unreliable (changes with Google’s moody algorithms), what is the reliable alternative?

PPV (pay per view traffic generated by adware) is also declining, not only in available inventory, but also in quality and profitability. So, this is not the answer.

Face Book PPC was really hot early this year, but not anymore. The attention is shifting back away from that ad zone and the competition is eating the profits of average affiliate marketers. They still can make it do better at Face Book by changing the ads display positions so that the user doesn’t get trained on ignoring a certain area on the screen.

Twitter doesn’t have an advertising platform yet. I have no idea when it will come to live, but unless they act now they’re missing a huge opportunity to fill a black-whole-sized gap in the advertising space.

Good ol’ banners died for a while, but advertising agencies figure out a way to partially revive it. The regular user is used to two kinds of banners more than the others: the 468×60 (like the on at the top right hand corner of this website) and the vertical 120×600 and 160×600.

On the other hand, squares 250×250 and rectangles 300×250 are more perceived as a picture than as adverts, especially when they are embedded within the text. This kind of banners still gets some attention and I expect it to keep getting that much attention as long as people are interested in pictures that could save them the time to read the whole thing.

Finally, my view of the way to revive PPC advertising again is only by embedding sponsored ads within the organic search results, or changing the search results page layout so that the ads are not shown where they are used to be ignored. This could give PPC another push for a while, maybe to the end of 2010 if implemented immediately.