High Keyword Prices Prompting Shift Back Toward Organic Search

Excellent interview with Andrew Goodman.

Andrew believes:

  • High keyword prices are prompting a shift back toward organic (free) search. Organic will never be the whole solution, however.
  • In some verticals, keyword prices are so high that small advertisers are getting priced out. However, companies with strong follow-on sales efforts are still getting attractive customer-lifetime ROIs.
  • Keyword prices have flattened of late. Andrew believes this is because the market is in a “research” phase and that prices will eventually double again.
  • Click fraud is real but not as big a problem as the media suggests.
  • Most companies do not audit click streams. Doing so would be of limited value because Yahoo! and Google already perform audits and have the last word.
  • Click-stream audits often reveal traffic spikes with disappointing conversion rates, but this is not always the result of fraud.
  • Advertisers have little control over bad-click refunds. Refunds tend to run at less than 5% per month (which does not include clicks that the engines have not charged for).
  • The outlook for Microsoft AdCenter is poor. MSN’s conversion rates are attractive, but Google and Yahoo have better talent, and AdCenter is in “chaos.”

A lot of great stuff in there.

I’d agree that AdCenter is in “chaos”. I find it cumbersome, and it is very difficult to port existing campaigns. It has a long, long way to go before it gets anywhere near Adwords.

As for organic vs PPC, I think that’s very true. Spending patterns don’t indicate that everyone is pouring their PPC cash into SEO just yet, however as more people track their ROI, and as the click prices increase, expect the “free” side to look better and better.

  1. dburdondburdon06-02-2006

    On the click front, I find Yahoo more vulnerable. Its their poor quality affiliate network.

  2. stoner3221stoner322106-02-2006

    When I get a $2,600 bill for one day of advertising and no ROI it’s the end of Google advertising for me.

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