How Much Do Misguided Clicks On Paid-Search Ads Cost Brands?

A better question might be: How much does Google earn quarterly on paid-search clicks that never convert for brands? One major concern is the amount of real estate that engines devote to the paid search in query results, because it means they will have to pay for traffic they may have previously received for free from their organic listings.

The Wall Street Journal (WSJ) put out a call Tuesday requesting that the Federal Trade Commission (FTC) step up and make Google, Yahoo and Microsoft more clearly highlight links in paid-search ads.

The media agency claims that the ads have become deceptive -- more difficult to distinguish from organic results -- since the FTC in June 2013 published a directive to improve the difference between paid advertisements and content. The commission originally made the statement in a letter sent to seven search engines in 2002.



I'm not sure how your organic search results look on, but the majority of my paid-search advertising query results have a yellow highlighted "ad" icon next to the link.

The WSJ points to research published Monday from Benjamin Edelman, Harvard researcher, showing how during the past dozen years Google lightened the colors shading its paid-search ads before entirely eliminating the shading. He suggests that without the background color the ads look like organic results. "Over time, these background colors have been dramatically reduced," he writes. "By 2004, Google eliminated background colors for side-of-page ads. Then, in winter-spring 2014, Google also eliminated background colors for top-of-page advertisements."

Highlighted or not, the ads take consumers to content they request more times than not. WSJ reporter Rolfe Winkler writes about Google, Microsoft and Yahoo not adhering to FTC standards and Edelman debates the vanishing highlight behind the text, but the focus should be on the thousands of dollars brands flush down the toilet when the consumer doesn't find the exact product they seek after clicking on the paid search advertisement.

Citing Zenith Optimedia projections, clicks on search ads will generate about $55 billion in worldwide revenue this year.

Sid Shah, Adobe director of analytics for advertising solutions, lightly touches on the issue when he points to it costing advertisers 13% more in the third quarter for paid search ads because consumers cannot tell the difference between organic and paid listings.

Ad format changes leading to wasted clicks is a highly debatable topic, Shaw told Search Marketing Daily. It's very difficult to quantify the amount of money brands waste on misguided clicks because wasted or misguided clicks are due to a variety of reasons. Mismanaged campaigns, incorrect URLs linked to a product ad leads to high bounce rates or wasted clicks. "Or worse, a missing page will lead to a lot of wasted clicks," he said. "We see numbers that indicate CTRs rose coincident with the ad format rollout, but it is not conclusive. This has happened before. With sitelinks the CTRs rose between 20% and 30%, but some contented that it came at the expense of organic results"

"That said, if these changes were detrimental for the consumer then the ROIs would drop and spending on search would drop. We have not seen that effect," he said. "So it is difficult to say, if these changes lead to wasted clicks."

When search campaigns are not synchronized with the offline media spend it can lead to wasted spend, he added. For instance, if a brand's TV ads are very effective, the brand might want to spend more on search right after a TV campaign to maximize the awareness generated and spend less when the TV campaign is off. So that is a media fighting efficiency issue.

Shaw said he has seen cases where there is a mobile campaign but the site is not optimized for mobile search. One advertiser saw a 70% increase in mobile conversion rates when they switched to a mobile optimized site. "One could argue that before mobile advertising most mobile clicks were wasted," he said.

Indeed, a tough question to answer, agrees Mark Ballard, director of research at RKG, a Merkle Company. "A click from a user that can't discern the difference between the paid and organic listings isn't necessarily wasted, and we don't know if any given click we get is from someone that understood what they were clicking or not," he said. "We haven't found that the quality of the paid traffic we get from Google or the other engines has decreased over the years. If anything, it has generally improved as more users become comfortable buying things online and strong performing ad formats like product listing ads have come into the picture."

Ballard said the greater concern for site owners is that the engines blur the line between the paid and organic listings, and also simply devoting more real estate to the paid results, means they will have to pay for traffic that they may have previously received for free from their organic listings.

At a MediaPost Search Insider Summit a couple of years ago, a major brand during a discussion said unidentified paid search ads can cost the company thousands, if not millions annually.

1 comment about "How Much Do Misguided Clicks On Paid-Search Ads Cost Brands?".
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  1. Kevin Lee from Didit / eMarketing Association / Giving Forward, October 14, 2014 at 4:58 p.m.

    Since its not likley that Google (and Bing/Yahoo for that matter) will make changes that chance consumer click behavior in a material way it is in the advertiser's best interest to make the most of the brand search conundrum. By using copy that bifurcates the search audience and landing the consumer on landing pages better suited to conversion marketers can recoup and often exceed the marginal cost of paying for branded clicks. Use of PPC Sitelinks further improves the ROI on brand search clicks overall, even taking into account cannibalization on organic links.
    Having the right strategy to deal with the realities of the PPC landscape beats crying over milk that may or may not be spilling ;-)

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