It’s no understatement that Google brings in a large profit from AdWords. In fact, Google recently announced ad revenue profit for the third quarter in 2012 of $10.86 billion, with $100 million per day through AdWords. Google’s AdWords serves 5.5 billion impressions per day just on Search pages, with 25.6 billion impressions on the Google Display Network per day. However, even with Google’s AdWords profits, investors are a little disappointed in Google’s third quarter numbers for 2012.
WordStream, a search engine marketing developer, analyzed Google’s AdWords profits to determine just how the profits were generated. Upon analyzing a number of statistics and 2,600 AdWords Grader audit tool accounts, WordStream concluded the average click-through-rate (CTR) for Google’s third quarter came to 3.5 percent. What does this mean? According to WordStream’s results, advertisers paid for 192 million clicks per day.
However, on the Display Network, there were only 45.8 million clicks per day, with an 0.18 percent CTR. Although the Search figure was actually 12.4 percent lower than Google’s second quarter, the Display number had increased by 13.8 percent.
WordStream also found that the average cost-per-click (CPC) varied between the Google Searches and Google’s Display Network, with Google Search generating $0.53 and the Display Network generating $0.35. Both of which declined dramatically from the previous quarter. Google’s Search declined by 16.5 percent, while the Display Network dropped 18.2 percent.
The controversy surrounding Google’s AdWords profits is generated from the fact Google reported far different earnings than what WordStream concluded. According to Google, the CPC was only down 15 percent year-over-year and decreased only 3 percent quarter-over-quarter. Google admits the numbers could have been more favorable, but due to foreign exchange rates the company took a hit.
Despite the CPC decreasing, WordStream did find the average conversion rate during the third quarter to be higher, which is attributed to the assumption advertisers are optimizing for conversions. During the third quarter, the Google Search conversion was 5.63 percent, while the Google Display conversion was 4.78 percent.
So, how could the conversions increase if the CPC and CTR declined? It’s believed, the increased in ad impression volume and clicks compensated for Google’s declines. Not to mention, the decreased CPCs may be more attractive to advertisers.
With these findings, how do you know if you’ll benefit from Google AdWords? As one of the top SEO companies in Utah, Local One understands the industry in which AdWords is utilized plays a role for both CPC and CTR. Currently, the top spending industries for AdWords includes Finance, Shopping and Travel, according to WordStream. In fact, WordStream found Finance produced over $3 per click on Google Search and more than $1 per click on Google Display.
Bottom line, more businesses are now turning to Google’s AdWords after the Penguin and Panda updates as there’s more of a focus on PPC. To stay ahead of your competition, Local One recommends looking at all of your options, including Google AdWords. If you need a further understanding of how the Google’s AdWords tool will help your SERP and generate profits, please contact Local One; a search engine marketing company in Salt Lake City.