Andy Stevens
Feb 1, 2024

Paid search: it’s time to address the ‘if it ain’t broke, don’t fix it’ mentality

Paid search is a lucrative industry; Google Search Ad revenue currently stands at a staggering $176 billion globally, having grown 6.8% in 2023… but are we using it to its full potential?

Paid search: it’s time to address the ‘if it ain’t broke, don’t fix it’ mentality

When it comes to digital ad revenue, GroupM’s 2023 Global End-of-year Forecast stated that search is the second largest segment and is expected to reach nearly $200 billion in revenue in 2023, growing 7.8%. GroupM anticipates a further 6.2% increase in 2024, potentially fueled by increased interest and competition in the sector following the integration of generative AI in search results.

Google Ad campaigns continue to drive return on investment for brands–hence the amount of ad spend they are, quite rightly, attracting. For many brands and advertisers, it’s easy to understand why they are being viewed as effective and profitable.

They are working away, every so often being fed with their allocated funds, and deliver adequate results, so all is happy in the world. The client is content, their Google scores are good, their “blended CPAs” are on track; there really is no need to spend valuable time tinkering with it (I have seen examples of search teams making zero account changes in 6 months).

To put it another way, it would seem that the industry is living in an era of ‘if it ain’t broke, don’t fix it’, and that’s ok… right? Wrong!

Paid search has plateaued

Despite all this apparent positivity, if we are being totally honest, in recent years paid search results have stagnated for brands and even declined. Cost inflation–we’ve seen CPCs increase by up to 70%–greater competition, hidden metrics, Google changes and new products have meant that results are not getting better as they should be, rather, they are going backwards.

In one example, over a 50% reduction in sales was identified after moving from Shopping to P-Max. The most shocking thing about this statement is that the industry knows this is a problem, but very few, only the elite search marketers, are doing anything about it.

The harsh reality is that paid search is broken. John Wanamaker famously said: “50% of ad budget is wasted, we just don’t know what half!” Whilst we have seen examples where 50% of allocated adspend for a typical Google Ad Campaign has been blindly spent inefficiently, I am not asserting that 50% is the global figure–if that were the case that would be the headline–but I am saying there is a massive opportunity for our industry to maximise sales and minimise costs.

Put bluntly, this problem is akin to $8.8-17.6 billion global spend on Google Ads essentially being wasted. By way of example, that’s £700 (US$ 887.8) cost-per-click for a product with a lifetime value of £300. In a world where every ad and marketing pound or dollar counts, this is unacceptable.

Overcoming the “Mere-Urgency Effect” with automation

According to the Journal of Consumer Research, humans are more likely to prioritise tasks with a deadline over those without one, even when the less urgent task offers greater rewards. This psychological quirk has been dubbed the "Mere-Urgency Effect”. Given the belief that search ticks on and is far from an urgent fix, deadlines to maintenance are rarely given, changes are rarely made and thereby, the greater rewards on offer are rarely collected.

And they so easily could be. As we know, Google Ad campaigns are subject to constant change. There has simply been no let up and unfortunately, amid rising costs in 2023 and increasing competition in search from the likes of TikTok, there won’t be anytime soon.

For digital marketing teams–as with other industries–there’s now, quite rightly, a heavy reliance on technology such as automation to try and deal with these changes and stay ahead of the competition by trying to become more efficient and agile.

Automation in paid search is highly adaptable, allowing marketers to quickly adjust strategies in response to changing conditions. By gathering and analysing vast amounts of data in real-time, it provides actionable insights that inform decision-making processes, allowing marketers to optimise campaigns, refine targeting strategies and allocate resources more effectively.

The data-driven approach facilitated by automation leads to more informed and impactful paid search strategies and ultimately, Google Ad campaigns.

Finding balance between automation and human impact

But it's only successful if this information is being used by a human to ask the right questions, make the right checks, digest the insights provided accurately and then optimise the campaigns correctly.

Remarkable results are available to marketers who use the right “independent” automated solutions and who optimise their campaigns accordingly. It’s fair to say that 30-50% of improvements are not just possible, in many cases, they should be expected.

In 2024, paid search teams must address this. Starting with a clear understanding of the fact that while automation offers substantial benefits in terms of efficiency and insights, there is an absolute need for it to be independent from human oversight and input.

Only when the two work together can the most effective and efficient Google ad campaigns be delivered, increasing ROI and profitability and maximising sales whilst minimising spend. There’s no time like the beginning of a new year to start anew, so why not go out and solve this problem?

Andy Stevens is the executive chairman at GOA Marketing.


Performance Marketing World

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