Back when AdWords launched in October 2000 it had just 350 advertisers. Now that number is more than 1 million. Advertising, most of which comes from paid search, accounted for 90% of Google’s $18.68bn in revenue last quarter.
For those that don’t know, AdWords is Google’s paid search service. Advertisers pay on a cost-per-click basis to have their ads shown next to keyword search terms across Google properties – whether that be its search engine, YouTube or most recently its Play app store.
Ian Carrington, director of performance at Google UK, says what has made AdWords so successful is its ability to connect users with advertisers.
“It offers amazing targeting. If you type in ‘flight to Instanbul’ it will pull up links for flights to Istanbul. It makes sure content from the advertisers was exactly what customers are looking for,” he told Marketing Week.
“This is not push advertising, it’s pull.”
Ian Carrington, director of performanc, Google UK
Andrew Girdwood, media innovations director at Digitas LBi, believes the success of AdWords lies in its low barrier to entry and the fact that concerns that exist in other sectors around ad blockers and click fraud simply don’t exist.
“AdWords was and remains to this day value for money. You could be a mum and dad store with a £10 budget and see the results.
Keeping search advertising innovative
The challenge, he explained is staying innovative. Carrington pointed to a number of recent updates – including “local inventory ads” which enable users to search for product availability at a nearby store – as ways for Google to ensure it stays relevant.
He also pointed to new technology such as programmatic, beacons and mobile payments that could all change how consumers and advertisers use search.
Google is also having to adapt to a world where people are increasingly searching for local information on their mobile devices. The key issue with mobile is that while a lot of people do research there they don’t necessarily convert – often choosing instead to go to a store, ring a call centre or use a desktop or tablet device..
For Google that poses a problem. Its cost-per-click rate has been dropping – it was down by 11% year on year in the quarter ending September – suggesting brands are still unwilling to spend as much on mobile ads as desktop.
While Carrington wouldn’t confirm this is the case, he did say that while there are instances where mobile is cheaper than desktop and vice versa, it is “more often” the case that mobile is cheaper.
Moving away from last click
Research conducted by Google and Ipsos in August found that 40% of online shoppers start research on a smartphone before making a final purchase on a TV or tablet. To keep up with that changing consumer behaviour Google is today (28 October) launching new cross device conversion features.
It will enable advertisers to view all their conversions in one place so brands can see all the ways customers are engaging with their businesses and make it easier to move their budgets to take advantage.
Carrington said this is important because it will help brands understand what other devices might have had an impact on a customers’ decision to purchase. Currently brand investment in mobile lags behind how much time consumers spend on mobile often because the conversion takes place on a different device.
“Most advertisers have an attribution model where the last click wins but there are lots of other signals and events that happen before that conversion. It is important advertisers are able to measure and attribute quick so they place the right value on difference platforms – whether search, display or YouTube,” he explained.
Girdwood believes this could be a key way for Google to get more advertising budget in the face of competition from social media sites, namely Facebook.
“This can help remove advertiser fears around current expenditure. People research on a commute on their phone and then buy the product on their lunch break. If they research and click via AdWords there should be credit,” he explains.
“They also face a challenge from Facebook where brands can say ‘here’s a bunch of people that don’t yet know they need my service but we can target via their demographics and interests’.
“That pressure will push Google to innovate and think about how they integrate their proposition into a world where people are using multiple devices and in the not too distant future when they do less search as Google systems get better at giving people the answer they are looking for.”