Your Low Conversion Rate on Pay-Per-Click

When I was growing up, I could never change the opinion of my mother by saying, “But everyone else is doing it.”

My mom had the courage and confidence to believe that Everyone Else’s mother was wrong.

That’s a high level of courage and confidence. I’m hoping that you have it, too.

When I speak to advertising professionals on the subject of advertising, I often find myself having to explain how certain widely-held beliefs are wrong. I will patiently produce the evidence, the case studies, and scientific documentation. In most instances, the audience will concede that I am right. Then someone will say, “But everyone else is doing it,” as though it is impossible for “everyone else” to be wrong.

Here’s an example: most people believe in tightly targeting the right customer. They are convinced that the secret of successful advertising is to “reach the right people.”

I believe targeting is essential if you are in a business that sells to other businesses.

If you sell computer chips, you need to reach computer manufacturers, so send a letter, an email, a salesman to knock on their door. If you sell cardboard boxes by the traincar load, you need to reach companies that sell things packaged in cardboard boxes. Send a letter, an email, a salesman to knock on their door. The world of B2B lives and dies with their ability to “reach the right people.”

But when you are selling a product or service to the public, “targeting the right customer” works only about 10% better than reaching the untargeted masses.

If the cost of targeting is less than 10% higher than the cost of not targeting, go ahead and target. But I am confident you will find that targeting usually costs considerably more than that.

“But everyone else is doing it.”

Please excuse me while I bang my head against the wall.

1. Nielsen is the highly scientific organization that measures television and radio audiences.
2. D2D is cloud based, and leverages open source technology designed to collect, manage, and analyze complex data.
3. Les Binet is a highly respected data scientist.

In the summer of 2020, Les Binet published a huge, long term study on the effectiveness of marketing. Here is one of the many things he learned:

“In many ways, online marketing and online media has done itself a disservice by focusing on targeting more than reach. A couple of very interesting studies are out there. One was a study by Nielsen, about the relative contributions of reach versus targeting in effectiveness, and they concluded, with a survey of about 500 econometric models, that targeting only adds about 10% to the effectiveness of the campaign on average. A very similar result came from some work by D2D, where they looked at over 200 econometric models, from a wide range of categories, and they concluded that targeting of a campaign adds only about 10% to effectiveness. So the same numbers, two very different methods.”

Have you been following the news about Phenylephrine, the decongestant that was proven to be ineffective in 2007 and in multiple studies since then, but is still on the shelf 16 years later?

According to a recent news story by Sarah Zhang,

“Americans collectively shell out $1.763 billion a year for cold and allergy meds with phenylephrine, according to the FDA, which also calls the number a likely underestimate. That’s a lot of money for a decongestant that does not work.”

Generally speaking, I’m in favor of government staying out of the way of business, but this seems to be a case where the Federal Trade Commission might ought to step in and say, “Guys, you need to quit lying to the public.”

“But everyone else is doing it.”

One last example: Google, LinkedIn, and every other seller of pay-per-click will aggressively argue that you need to include their “expanded network” to achieve the lowest cost-per-click. What they are telling you is absolutely true as long as you don’t mind paying for clicks by bots.

Industries with the highest rates of click fraud include photography (65%), pest control (62%), locksmiths (53%), plumbing (46%), and waste removal (45%).  [data provided by clickcease.com]

Let me be clear: I do not believe – even for one second – that Google or LinkedIn or any other major seller of pay-per-click advertising is directly involved in a scheme to sell bot-clicks. But have you ever looked into exactly who and what constitutes an “expanded network?” You really should, and I hope you will. When you have gathered the facts, I believe you will probably opt-out of all the expanded networks offered by the major sellers of pay-per-click.

But please know in advance that when you do this, alarm bells will go off and each of those sellers of pay-per-click advertising will tell you that I don’t know what I’m talking about and they will passionately argue that you are making a horrible mistake because, “everyone else is doing it.”

Did you know there are a variety of services that can identify, track, and block bots from clicking your online ads?

You didn’t know that? Well, it’s probably because, “no one else is doing it.”

There are more than 6 million businesses in America, but the largest of those bot-tracking and bot-blocking companies [cheq.ai] has only 15,000 customers.

I’m convinced the sellers of pay-per-click ads are perfectly willing to let you buy bot-clicks from their expanded networks for the same reasons that all the drug companies are willing to sell you Phenylephrine.

It is entirely possible that I am a cranky and catankerous old man, and that everyone else is right.

So I’ll let you look into these expanded networks and decide for yourself.

Does that sound fair?

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