Businesses may be wasting billions of pounds a year buying up keyword advertising on search engines such as Google, a new report by auction website eBay has claimed.
The study disclosed that most of the money spent buying up search terms was a waste of time and had little effect on sales. “Results show that brand keyword ads [where companies purchase ads on searches for their own name] have no short-term benefits, and that returns from all other keywords are a fraction of conventional estimates,” said the authors of the research.
Most customers would have clicked through to a particular site without being prompted by an ad for the company, according to the 25-page report – given the not entirely search-friendly title of Consumer Heterogeneity and Paid Search Effectiveness: A Large Scale Field Experiment.
“[In the absence of paid search links] consumers simply substitute to organic search links [the results Google's search algorithm brings back without companies having to pay],” said the report. “This implies that brand keyword advertising has neither persuasive nor informative value to well-known corporations.”
It was revealed by the report that “new and infrequent” users are influenced by advertisements but it is “existing loyal users” who already know all about a service and would already go to the website account for most of the clicks on paid-for keywords. “Advertising may appear like it is successfully attracting these consumers, when in reality they would have found other channels to the firm’s website,” said the report.
“We calculate that the short-term returns on investment for search engine marketing were negative because more frequent eBay shoppers are accountable for most of paid search sales.” “The results show that almost all of the forgone click traffic and attributed sales were immediately captured by natural search,” the auction site found. It was also revealed that the removal of these advertisements simply raised the prominence of the eBay natural search result.
