Pay-Per-Click Disadvantages
Pay-per-click advertising suffers from a number of significant disadvantages, some of which are inherent in the nature of pay-per-click advertising and others limited to specific pay-per-click providers. Whilst none is sufficiently serious on its own to discourage the use of pay-per-click advertising, cumulatively they highlight the need to be aware of the potential disadvantages of pay-per-click and the benefit of using expert pay-per-click management.
Extra-contextual Delivery
The major pay-per-click providers pride themselves on the ability to show advertisements on web pages, whether on search engine results pages (SERPs) or third party websites, whose content is related to the chosen trigger keywords. The claim that pay-per-click offers ‘contextual advertising’ sets it apart from conventional banner advertising and forms a major part of the sales pitch. The pay-per-click providers’ attempts to deliver on their contextual promises have been only partially successful – complex pattern matching is used in an attempt to discern the theme of sites, but anomalous results are still produced, particularly, in the case of Google AdWords, when the advertiser accepts the default ‘broad match’ option. A good example would be a search on Google for C5 envelopes producing an advertisement for a Citroen C5 car - an advertisement which in this case was so poorly composed that it didn’t use the words ‘Citroen’ or ‘car’ anywhere in the text. Until search engines attain their holy grail of effective semantic indexing – a method of determining the meaning of web pages several degrees more advanced than pattern matching – pay-per-click advertisers have to pay particular attention to ensuring that the promise of contextual advertising results in the delivery of contextual advertisements.
Bid Price Inflation
Pay-per-click advertising has been a phenomenal success for the pay-per-click providers, with advertising revenues rising at above 20% per annum in recent years. The cause of the revenue growth has been an increase in both the number of advertisers and their advertising spend. This produces a virtuous circle for the pay-per-click providers, and a vicious circle for the pay-per-click advertisers, in that increasing numbers of advertisers results in an increase in both the bid price for individual key phrases and the actual click-through-cost (CTC) incurred. Ever increasing bid prices are required for a keyphrase to retain the same position in the advertisement ‘pecking order’, a situation which increases the cost, but not the benefit, to a pay-per-click advertiser. A successful pay-per-click campaign may find that it is priced out of the market as competition increases and bid price inflation takes hold – the economics of a pay-per-click campaign may change entirely if the CTC doubles, or quadruples, in a short space of time.
Clickthrough Fraud
As soon as Google widened the remit of AdWords to display advertisements on third party ‘content network’ websites under the AdSense programme it provided an avenue for dishonest website owners to defraud the system. Google has taken measures to prevent clickthrough fraud. At the same time, it has been very guarded about the extent of fraud perpetrated by or for the benefit of participants in the Adsense programme. It should be borne in mind that whilst the victims of a click through fraud are the pay-per-click advertisers, the potential beneficiaries are both the fraudsters and Google, who take their percentage of the cost per click of both bona fide and fraudulent click throughs. Rigorous campaign monitoring is vital if an advertiser is going to detect, and receive recompense for, systematic clickthrough fraud.
