Many new Google AdWords account holders wonder whether there is any way to save by volume discounts with AdWords. It seems to them that a large financial commitment might be less costly per click through.
Right away, 2 notes should be mentioned on the broader subject of economy on scale or simply economy.
1. It is a known story that e.g. travel comparison site cheapflights.co.uk approached the AdWords Account Management and Maximiser Team about driving a high volume qualified stream of traffic to their sites. As a result, the company found a 45% return on ad spend with AdWords. Though it is reported to have been achieved mainly through joint optimization efforts rather than as a discount in favor of big pockets, it seems evident, this option is only available to the big guys with a large financial commitment.
2. An approximate 30% indirect discount on ad spend might be realized if you sign up for both the AdWords and the Google Checkout programs provided this solution fits your business model. Checkout is a service that makes buying and selling across the Internet fast, convenient, and secure. The point is that as you run your AdWords ads you accrue credits that trim back your Checkout bill.
I know the above are not exactly what account holders have on mind. On the other hand, I think that direct volume discounts relative to auction pricing could be pretty unusual; not to mention all those ad traffic aggregator agencies that could be swarming all over the web by now. Still gossip emerges from time to time that Google perhaps pays rebates to large agencies in the EU or Asia.
It might sound disappointing for many, but the real “discount” is entirely down to achieving a high CTR, through a combination of targeting ad groups, selecting effective keywords, and making use of negative keywords etc. In 2006, a friend of mine was able to get one large client to about 9th or 10th in their State for a spend that was 65% as much as the lowest spender in the top 20 – but they ran up to 4000 unique ads to do it – that’s really a lot of efforts.
Based on the above, there are a few things that a large account can do, but a SMEs can’t:
– When a human error occurs at Google, large accounts can make Google to launch an appropriate enquiry into the issue
– Large accounts can make use of AdWords API-IME, it is very advantageous e.g. for online warehouses with fast changing inventory or large catalogues
– Large accounts may enter a proper contract to effect payment *afterwards*, it’s a cashflow advantage as compared to SMEs paying in advance
– Trademark protection – they often account for the lion’s share of conversions
– The combination of a high CTR and a high search volume often allows to reduce the CPC almost to $0.01 per click. An SME cannot achieve it due to the lack of high search volume.
In order to accomplish the above, the specialist in charge of the Google AdWords campaign should understand how the generalised second price auction works. Likewise, he or she should acquire skills to master web analytics, landing page design, negative keywords and an ingenious use of language in ad texts etc. The most fundamental thing, however, remains the product or service that can be sold online. We encounter merchants from time to time who are trying to make use of AdWords when they should be following other approaches. AdWords might have huge benefits but cannot replace a complex online marketing strategy.