Google makes money purely through paid advertising. The company’s revenue for the first quarter of 2015 was US$17.3bn. So they are clearly doing something right. But at what cost does Google’s billions come to online businesses and end-users.
According to Google support, publishers using AdSense receive 68% share of the revenue, which means paid ads is generating revenue in excess of US$40bn a quarter.
Yet 74% of internet users say they have never clicked on a Google ad, or have rarely clicked on a paid ad. In 2013, the Telegraph reported that 40% of web users did not realise the links they were clicking were evens paid ads (Google has now flagged that up with a little yellow signpost.)
So what does this say about the mentality of web users in relation to paid ads and how is Google making so much money?
Study of paid ad clicks
Two recent studies on paid ads gave two different impressions. WordStream claim that 41.4% of users consciously clicking on paid ads in search listings. Mike Moran at searchengineguide.com say just 8.28% click on Google ads and 35% do not.
The stats are interesting. WordStream point out that the people clicking on ads are because they appear in the top three results. Web users as you know do not have any patience. We want results straight away and will typically click whatever appears on screen.
However, it is often the case that when you click on these ads, you do not find the information you are looking for. So you no longer click on the ads and they essentially become clutter on search results. They are a nuisance.
Mike Moran says when he asks an audience if they click on paid ads, the vast majority of the room say no. Yet Google’s ad revenue suggests otherwise. Or is that due to millions of company’s paying for the ads in the hope they will get a return on investment.
Views of whether paid ads work or not are mixed. But again, that depends on how you execute AdWords.
The major-league mistake marketers make when crafting their ads is to use generic keywords that throw the net over a wide area. The problem is that users are looking for something specific and the landing page they find themselves on after clicking a paid ad does not correlate to the promise on the ad.
And this is why users are frustrated with paid ads and do not consciously click them. The balance here however is tricky to get right, because if purchase keywords that are less competitive – albeit more affordable – there is little point if end users are not using those keywords.
AdWords can be a Catch-22 for marketers, but unless landing pages give clickers the information they feel they are promised, end-users will stop clicking on paid ads altogether because they cannot be trusted.
Of course, Google will never let that happen and the first sign of companies pulling out of paid advertising in favour of other forms of online marketing strategies they will take drastic measures.
But that will not help companies paying for ads that nobody is clicking on. Therefore, if you are investing in AdWords, make it your priority to target an audience and use keywords that specifically correlate with content on the landing page.