DON’T BE THE “MARK” IN THE GOOGLE ADS GAME

In the poker game or at the pool hall, “The Mark” is the weaker player – the one that thinks they are doing well, but in the end, they lose money while the smarter players who know the game better take it.

In Google Ads, some advertisers are spending most or all of their budget on keywords and display placements that get in front of buyers or at least potential buyers.  Others will spend thousands on search terms or display placements that will never turn into a customer.  How do you know which one you are?  And what can you do to make sure you are spending most of your advertising money on finding potential customers? 

Google does not make it easy, but If you dive into your Google Ads data and find your “Search Term” report, and look at “Where Ads Showed”, you can see where a good percentage of your advertising spending went.  If your search terms are well targeted, and your placements are on websites you have heard of, you are likely one of the winners in this game.   If your website converts well, then your Google Ads campaigns should be productive.  But if your money is being spent on competitor searches, barely relevant keywords, or display clicks from kids’ games, then you are one of the ones paying Google and building their billions in revenues without much return. 

One worrying trend is that advertisers can no longer see where every dollar is spent.  Advertisers used to, but in what is arguably an abuse of their monopoly position, Google no longer letting you know where all of your advertising dollars go.  With over 90% market share, they know there is no other advertiser with the reach you need if your business depends on paid search marketing. 

Google Ads is getting harder.  A big part of that is more competition, since for a lot of businesses who need to capture customers when they are looking for their product or service, Google Ads, in absence of a strong SEO strategy, is about the only realistic option for their advertising dollars.  For many, Google is the only game in town.  For others, Google Ads is a key part of their marketing mix.  But this causes a problem for Google.  What do you do when your revenue potential from advertisers grows faster than your advertising spots?  particularly the 4 spots at the top of lucrative Search results?

Google’s relentless Push for Flexibility with your Budget

Over the last year or so, Google has been relentlessly pushing advertisers to give it more flexibility with their allocated Google Ads budget. “Use Display Expansion”, “Use a Portfolio strategy” and the ever ubiquitous but largely wasteful “Upgrade to Broad Match” are frequent suggestions.  You will see all these and more under “Recommendations”.  Advertisers or Agencies may even have been “specially selected” for help with their accounts and campaigns with real live people on the phone, who encourage/tell you/cajole you, sometimes relentlessly, to do things like “upgrade to broad match” or to let Google “Auto-Apply” recommendations at will.  Google seems so desperate to get more flexibility on how they spend your budget, and any advertiser would have to wonder why. 

Google’s biggest problem

Google is unrelentingly secretive about how its Ads algorithm works.  We know from the anti-trust trial that they like to “mix things up”, but what is behind this relentless push for flexibility with your budget?  

Google talks a lot about how it uses “AI”, “Machine Learning”, and all the data it has at its disposal to help clients with their campaigns.  But a skeptic would also be very sure that Google is also using all of that data and algorithms to maximize its own profits and keep its share price up.     

Given the secrecy, and the recent revelation that they do “rig the game” in the auction, and has a close eye on meeting earnings targets, we are allowed to speculate.

Here is my theory. 

Having worked with Google Ads for years, and seeing things evolve as they became more and more competitive, I have concluded that the increased push for control over your budget is Google’s way of addressing its number one problem. 

What is the biggest problem that Google has?  On Google Search, are a limited number of “Money” searches every day – searches that have a good to high probability of leading to a purchase or lead. Searches that are worth paying for.  Searches where a business will pay to appear at the top of the results to be sure potential customers see them.

A “Money Search” is one where there is a reasonably high likelihood of a purchase or quality leads.  If you have a “money” search, say “New York Plumber” or “order Pizza Online” then there is a high percentage chance that the searcher will get out their wallet and pay for something.  Advertisers will happily pay up to a certain amount for these clicks.  In theory, Google Ads is an auction, and with any auction, there is a maximum amount anyone will (can afford to) pay for a click. So if there are 200 searches a day for “New York Plumber” and 100 plumbers in New York willing to pay up to $50 for 5 clicks per day – with only 4 spots at the top of the search results, the math says the plumbers are willing to pay $5000, but the available inventory is only worth $2,000 if people click 2 plumbers per search.  If the bids just go up and up, advertisers will drop out of the auction when they see clicks that are too expensive. 

How does Google get the rest of the money from those willing to pay?  If the bids get too high, anyone watching will change bid strategy and limit bids.  But if Google can take the rest of that budget and spend it on the multitude of related searches that are done every day (“plumbing supplies”, “plumbing jobs”, plumbing courses” and the many “how do I…” replace a kitchen sink, etc. searches, plus put the ads out on the display network or on YouTube, and a generous sprinkling of brand or competitor searches.  That way, Google can share the good searches between the top advertisers, thus keeping their revenue coming in.

Even with tight control, Google is still increasingly giving itself more freedom to show ads on more searches.  “Exact Match” is not “Exact Match” anymore.  In fairness to Google, yes, people do search for the same thing in many different ways, and you really could be missing out.  But in typical “give them an inch and they take a mile, (or, apparently, give them a thumb & the take your arm” for metric types), any bit of flexibility you give Google will let them waste a large percentage of your advertising spend.    

Google is working hard to diversify the ad spending and getting advertisers to spend more on less targeted clicks.  That way, it can take maximum revenue for the maximum number of advertisers.  People running Google Ads are increasingly encouraged to give Google more flexibility with their budget.  We are seeing that every time we monitor our Google Ads accounts.  Assuming Google is using all of its highly touted “AI” and machine learning to maximize its profits, and it keeps looking for flexibility, the flexibility must be boosting its profits. 

Advertisers can either vigilantly track their account spending as best they can and keep that spending on track to work for their business, or they can trust Google, and take the placements Google chooses for their ads.   

WHAT WE LEARNED ABOUT GOOGLE ADS FROM “SMART” CAMPAIGNS

One of Google’s first forays into letting advertisers to give Google control over their budget was “Smart Campaigns”. Just put in your credit card, your website, and your daily budget, and Google would tell you how well your campaigns were going on a regular basis.  However, when you looked into the data that Google provided, particularly the search terms people used, for a lot of advertisers, most, if not all of the people who contacted you or bought something were searching for your brand in the first place. Google was only able to skim a few advertising dollars off on a purchase people were going to make anyway.  Smart for Google, not so smart for the advertiser.  Google’s solution was to no longer show advertisers the search terms where their ads showed.

“SMART” CAMPAIGNS V2?  – PERFORMANCE MAX

The most recent iteration of “Smart Campaigns” are the new “Performance Max” campaigns.  Performance Max campaigns promise advertisers reach across both Search and all the Google networks to bring home the conversions for your advertising dollars.   With a name like “Performance Max”, what could go wrong? 

Many people who professionally run Google Ads campaigns quickly became suspicious when it became clear that “Performance Max” was a complete black box as far as telling you where your advertising dollars were really going.  Performance Max campaigns may have reported a lot of “conversions”, but clients were not seeing them on their end.  On top of that, while the “Performance Max” campaigns appeared to do well, for a lot of accounts they were cannibalizing other campaigns that had been performing very well for years.

Another red flag with “Performance Max” campaigns was that negative keywords, including your brand keywords could not be added initially, and later, only with a request to a Google Ads rep working for Google.  But most of the data – actual keywords searched, what keywords converted and where your advertising dollars actually went remains hidden from you, the advertiser.  

Actually, if you have a product that a lot of people might not know about or not be searching for, and some good pictures, graphics, articles, and some compelling video, Performance Max can be a great way to get your product in front of a lot of what could be the right people for a reasonable cost.  

Performance Max can also be great for ecommerce, where conversions are verified with actual sales, and where you may have too many products to set up with “Shopping” and “Remarketing” campaigns.   

However, Performance Max campaigns have to be used with caution. 

With regular Google Ads campaigns, if they stop performing well, someone skilled in Google Ads could dive into the data and figure out what was going wrong and address the problem. With Performance Max, it is hard or impossible to look under the hood to see what is going on if Performance is below expectations or drops. 

It seems that in Google’s ideal world, they would turn Google Ads into more of a Netflix, where you pay your subscription money and you get what you get. It is not like there are a lot of other search engines out there to buy advertising on when Google has over 80% of the market.  

Make Sure your Advertising dollars are spent wisely on Google. 

If you give Google control of your budget and don’t watch things carefully, Google will spend the money where it helps Google’s bottom line most.  If you have the right settings in your account setup, keep an eye on things regularly and have accurate conversion tracking set up, you can do better than your competition on the searches that bring in real customers and clients.  You can control how much you spend on brand, competitor, display and video searches, and have the data available to make changes if sales drop or leads slow down. 

There are lots of tips/tricks/strategies out there from a lot of experts- all telling you how Google has the information, data, and technology to help your campaigns do well – including their mysterious “Machine Learning” and you can trust them.  But few seem to evaluate Google as a very successful profit maximizing company, with all the data on its customers – the people paying Google billions of dollars a year to show their ads. Google’s challenge is to get as much money out of advertisers to drive its own growth and keep its shareholders happy.  Of course it is going to tell you that it’s technology is working for you, the advertiser, and it does have to show you a return on your advertising investment, but only enough return to keep you spending.  There are no direct competitors to go to. 

Google’s non-search inventory is not all bad. In fact, some of it can create amazing value with low-cost impressions and incredibly well targeted ads – giving advertisers the ability to boost brand awareness, get their products or services in front of people shopping their competitors, and promote new products at great prices.   However, it is best to keep control of the budget and targeting for these campaigns. 

The good news is that if you keep your advertising spending focussed on the best placements, while your competitors give in to Google, you can out-compete them for the best clients & customers. 

Leveraging years of experience, I set up campaigns so that clients know where their money is going.  I make sure that we minimize or eliminate poorly targeted clicks on irrelevant or unlikely to convert keywords and set up industry specific strategies to focus display, video, and other ad spend on tactics that will build brand knowledge and awareness and generate business for clients based on conversion tracking that is as accurate as possible.   and report regularly to clients.