The auction website giant, Ebay, has studied the impact of advertising with Google adwords. The study found that paid for advertising with Google PPC model, adwords did not boost sales.
Google PPC was all the rave of the 00’s but now we wonder if it’s still as effective at bringing in the business. A recent report by auction website eBay has found that paying for advertising on search engines has little effect on sales.
Search engines such as Google and Bing offer companies the option to display targeted advertising when certain keywords / phrases are searched.
This means their websites appear more prominently if a person searches for a particular term or phrase.
Most people who clicked through as a result of this service were loyal customers who would have come to the site anyway, Ebay found
"Incremental revenue from paid search was far smaller than expected because existing customers would have come to eBay regardless, whether directly or through other marketing channels," said an eBay representative.
In carrying out the study, presented at an economics conference held at Stanford University, eBay removed its paid-search keywords from MSN and Yahoo platforms in the US, while retaining them on Google.
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"Removal of these advertisements simply raised the prominence of the eBay natural search result," read the report by Thomas Blake, Chris Nosko, and Steve Tadelis from eBay.
"Shutting paid search advertisements closed one (costly) path to a firm's website but diverted traffic to the next easiest path (natural search), which is free to the advertiser."
Google own research suggested there was a significant increase in clicks as a result of search advertising.
But a company representative added: "Since outcomes differ so much among advertisers and are influenced by many different factors, we encourage advertisers to experiment with their own campaigns."
Household brands have highly engaged user base
Dr Philip Alford, director of the Digital Hub in the School of Tourism at Bournemouth University, told the BBC that the size of the brand made a big difference to the effectiveness of paid searches.
EBay has become a household brand name, they already have a highly engaged user base," he said, adding that many people would search the website directly when shopping online.
"With Google adwords, particularly for smaller organisations, it can make a lot of sense because for some of them, their websites aren't at a stage yet where they have been sufficiently indexed by Google, so they struggle to come up in natural searches for terms.
"The more clicks your adverts get, you get rewarded over time with a higher listing as you are perceived by Google as being relevant," he added.
"But it is interesting that a lot of people still are paying for terms that they actually appear quite high up the listings for, in the search results anyway."