Question

Henry Blodget uses his analytical skills to find Google's secret sauce. This may be it, but since most sites are still in the dark as to whether a person that arrived actually buys product, Google's ads may be only a rehash of banner advertising (with a twist). If that's true, Google's only real innovation as a business was its ability to sell click-throughs to advertisers as something that is more cost effective than impressions. They succeeded where many before them had failed.

But does it really offer higher rates of purchase for people that arrive on the site?Question. Has anyone actually bought something through a Google ad? Have you even clicked on one (other than to test the system)?

Comments

[chad]

If you're selling a specific good or service that can be purchased online, search traffic can be pretty effective in driving sales.

Network traffic seems to be pretty useless for creating sales though. I think a lot of people just do it for the branding.

[Chet Richards]

We used them for a client with a small corporate services business. For a while it worked fine - significant improvement in sales. The we noticed the click through rate going way up, but follow-throughs (and sales) staying flat.

Turns out that a local competitor was clicking through just to run up the costs. I understand that Google is trying to fix that problem, but we've been gun shy about trying it again.

Another good thing about the Google program by the way was that it was easy to set up and monitor, even for a very small business.

[AdWords / AdSense]

"But does it really offer higher rates of purchase for people that arrive on the site?"

Yes - views result in clicks, clicks result in buy. If you are only paying for clicks then the ratio will be higher, given that are not other facters such as click-fraud.

"Has anyone actually bought something through a Google ad?"

Yes.

"Have you even clicked on one (other than to test the system)?"

Yes.

"I understand that Google is trying to fix that problem, but we've been gun shy about trying it again."

Google only care about click-fraud if it hurts their earnings, which it does not. This is very similar to dynamics of credit card fraud...

"Google's Secret Sauce"
Google does not disclose core pricing and market information that allow it to create a honeymoon stage for its customers. Ad buyers and sellers get hooked and "optimized" downstream...

"improving relevancy of paid links"
Google's improving relevancy parallels the markets growth and its share of it...

"raw drivers in demand far outweigh it"
Yep, Google still has a loooog way to go and no one is going to stop them.

[John Robb]

Here's the question: If a banner advertisement was priced to generate the same price per click, would Google yield higher purchase rates?

[AdWords / AdSense]

"Here's the question: If a banner advertisement was priced to generate the same price per click, would Google yield higher purchase rates?"

Google does not care about higher purchase rates, since no customer in there right mind would disclose if they were making more money (e.g. getting a "good deal")...

Also, they do have CPM program - which clear is not making more money for them or it would be mainstream.

At the end of the day the only way to quantitively value CPMs are by CPC. So why sell CPMs?

[Larry Yudelson]

Google has tools for ad buyers to monitor conversions to purchases.