GoogleVillage has a terrible essay about Pay Per Click advertising, the type of “paid listings” service provided by Overture.com and Google, among many others, including (full disclosure) my largest client.
The article has no concrete reasons for questioning the future of PPC. In fact, it underlines many of the strongpoints of this marketing medium: it’s mostly relevant, it’s results-based, it’s less gratuitous and disgusting than banners, it’s flexible, and it does not require long term contracts or lock-in.
The author posits that popular keywords in a PPC system will price themselves out of the market:
There are only a limited number of keywords which are performing well for clients and as competition rises, so will the pricing for these rise. It may simply price itself out of the market except for companies with deep pockets.
That’s so ridiculous. First, there are dozens of variations of most keywords that an advertiser could use to accumulate site traffic while not paying high bid prices. Second, and more importantly, every PPC market functions as an auction, so if prices rise too high, the non-first bidder will no longer increase their bid, ending the bid inflation. I don’t remember hearing anyone say “Now that I can sell my girlfriend’s pre-worn panties on eBay, the price of pre-worn panties will go so high no one will buy them, and eBay will collapse!” Keywords in a PPC system have no intrinsic value (beyond a bare minimum of pennies that must be commited to every bid to cover the cost of serving that keyword) so it is not possible for there to be a “floor” that most advertisers can’t deal in. In fact, the beauty of PPC is that you can tie your bid price to the return on investment that you yield through that keyword.
The second point presented in the article, which makes even less sense than the first:
As well, there is limited ‘real estate’ on web pages that the public will tolerate being filled with advertising.
Any idiot could tell you that pay per click advertising takes up less screen realestate than banner advertising, which could be considered a benefit and not a drawback of the medium.
Tired of writing. Not worth the words.