Google Ads: “One Day of Strategic Thinking Gets More Return Than 30 Days of Work”
Is advertising in Google search still worthwhile, what are general trends in advertising and what is my advice to companies?
Thomas J. Caduff: Mr. Vetter, you recently published a blog post with the provocative title “The Google Ads Agency Is Dead. If It Doesn’t Change Completely”. Let’s start from scratch: What is the significance of Google Ads anyway?
Stefan Vetter: The significance is huge – and it is increasing. Google Ads is the world’s most successful advertising platform. In Switzerland, Google and Facebook alone generate more advertising revenue than all Swiss media combined. And there is no end in sight to this development: Google’s turnover grew by 23 percent in 2018 to over 136 billion US dollars.
More than a few websites are paved with advertisements. Are they even clicked on – are there reliable statistics?
Yes, there are. Until 2018, Google shared various key figures via the “Display Benchmark Tool”. The click rate in Switzerland across the entire display network was 0.24 percent. There we are almost in the realm of chance (laughs).
The ads in the search, on the other hand, are clicked very well. Click rates of over 1 percent are the norm here, which is a high figure in online marketing. This is certainly also due to the fact that almost two thirds of Google users are unable to distinguish between ads and unpaid results.
However, the click rate is not the decisive criterion for me – clicks alone do not sell. If my goal is awareness, I look at the visible reach of the campaign. If, on the other hand, I have direct sales targets, metrics such as cost per lead or per order would be the decisive factor for me.
Is advertising on Google expensive?
Advertising in Google search is expensive. In industries such as finance and insurance, click prices are often in the double digits – prices from 20 Swiss francs upwards are not uncommon.
However, Google also offers two other platforms: “Google Display” for advertising on other websites and “YouTube” for video advertising.
I see both as significantly undervalued in terms of click costs. In the future, these will probably only go in one direction: upwards.
We’re still in the gold rush phase there: I can get a lot of targeted reach there for very little money.
Is advertising on Google Search still worthwhile at all?
The click costs are very high, as already mentioned. At the same time, the quality of the visitors is also very high because we can address people at exactly the right moment.
So the question should not be primarily what it costs, but what it brings. The best way to find out is to do a test.
In industries with a lot of competition, Google Ads Search is first and foremost a growth channel. I can use it to increase sales quickly and efficiently. It’s becoming increasingly difficult to get past the black zero and actually earn money with it.
What major trends do you see in the advertising industry?
I see two big trends: consolidation and automation.
First, more and more budgets are directed towards fewer and fewer providers. As already mentioned, Google and Facebook in Switzerland are two companies that generate more revenue than all other local publishers combined. And this trend is likely to continue.
On the other hand, automation through artificial intelligence (AI) is having a massive impact on advertisers and agencies. For example, targeting at Google can already be automated to a large extent, which reduces manual effort and complexity.
This makes part of the work of account managers and specialized agencies obsolete. At the same time, advertising on Google will become more accessible and attractive, especially for smaller companies. This increases the pressure on prices and also on Swiss publishers.
How should companies advertise, do you have a few tips?
“One day of strategic thinking gets more return than 30 days of work”, stock exchange guru André Kostolany once said. I recommend first to clearly define the objectives of advertising. Campaigns often fail because this never happened.
Then I would test as much as possible. With competent support, you can certainly avoid some mistakes and limit the number of promising marketing channels. But I don’t know whether advertising works until I’ve tried it.
One advantage of online advertising is certainly that I get measurable results even with a small budget – and can thus estimate relatively quickly whether I am on the right track.
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