How Google is Driving Up Adwords Lead Costs

Sep 29, 2015 | Uncategorized

This is important if you use Google Adwords…

Over the past 6-12 months or so, we’ve seen Adwords lead costs continue to rise, despite several major advertisers (such as Corinthian) leaving the market.

It didn’t make sense. With less competition, why were bid cost, and as a consequence cost-per-lead, continuing to rise?

We believe we’ve cracked the code on why, and it’s Google. Specifically two things they’ve done.

1. Enhanced Bidding: Some time ago Google launched a new feature called “Enhanced bidding.” It seemed benign enough, basically it would auto-bid for you and is promoted as ideal for people with modest adwords skills. “Enhanced” or automatic-bidding works by automatically adjusting bid prices for keywords to secure a top position.

What happens is that when two or more advertisers are vying for top position, in a matter of seconds, it automatically plays one against the other and drives up costs.

2. SUGGING: Google has also made a major sales push that is being framed as “service” calls. (The terms for this is SUGGING – Selling under the guise of and it’s a ploy as old as time).

A Google “search expert” calls with advice on how to get better performance out of your Adwords campaign. One of their recommendations is to use enhanced bidding. In some cases, Google suggests the business stop using a 3rd party and offers to run the account for them. On the surface it makes sense to take the money spent on management fees and reinvest it in advertising. In practice, Google takes this opportunity to play one advertiser off the other and by removing the expert from the mix, is able to drive up cost by preying on the uniformed.

We’ve been drawn into a number of these “consultations” from Google representatives.

Left unchecked, this will continue to drive lead costs well beyond what is viable, further enrich Google, and be yet another punch to the gut for the Education sector. Even if you don’t get sucked into it, some of your competitors will.

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