According to Wikipedia, “In economics, dumping refers to the practice of selling below the normal price or at prices below cost in order to eliminate competition and take over the market.” In short, what is said to sell at a loss to burden you with smaller competitors, and then stay with the market.
This concept that seems to be very far from the online world we must have it increasingly present in Google Ads. A few years ago, when you were starting in the online sector, the previously known as Google Adwords was the ideal platform to publicize your services. We saw opportunities with words that only cost a few cents, and relatively small competition. However, with the passage of time, all that has changed.
Table of Contents
1. Evolution of Google Ads in recent years
If you have been in this sector for years or are part of a Google Ads agency,you will remember with nostalgia how before great results could be obtained with relatively little effort. Competition was low and costs per click very reasonable. However, over time prices have been rising, competition has grown greatly and Google has taken measures such as eliminating side ads, limiting the number of ads shown on each results page.
All this has led to an exponential increase in competition and costs, as well as phenomena such as the one that concerns us.
2. Who dumps in Google Ads?
Lately we see that what was once an opportunity open to practically everyone, is a window that closes more and more. We are starting to see it in markets like Spain, but where this is really appreciated is in more mature markets such as the United States, where we see some SaaS services (Software as a Service) offered by Startups that sell at $ 9 per month, for which they are paying CPCs over $50.
Making a quick account (and with due reservation, because each case is unique), if those companies have an excellent conversion ratio of 10%, they will capture leads at $ 500, and will not monetize those leads before 4 years … if they manage to survive or keep a customer for so long. They are companies whose only ambition is to grow as soon as possible at any cost, because the metric they sell to their investors is growth,not profitability.
As an example: here are the CPCs that you will have to pay in the USA if you want to sell Helpdesk solutions:
This circumstance also occurs in sectors where there are large companies that generate most of their business outside the network,and that use Adwords only as a stopper so that they do not enter competition for the online channel. If you are unlucky enough to live with such companies in your sector, your online marketing efforts will have to be great to get around those practices.
And finally, we are also going to meet with marketplaces and monsters of online sales such as Amazon or Alibaba, which have plenty of budget to cover any result that interests them … they may not make money selling you a pendrive, but they have managed to expel the small seller to be integrated into their platform.
I dare say that this is going to be more and more common, and that we are going to find ourselves more and more often with sectors in which absolutely analog companies,or startups with an impossible profitability but well financed,buy the first results for certain keywords, even knowing that they will never make this investment profitable. They pay absolutely unrealistic prices, knowing that no company that sells this service will be able to make their investment in adwords profitable to that CPC. But they do it with a good reason (for them): to place an insurmountable barrier to entry for new businesses that want to sell in that niche.
3. How to survive Dumping in Google Ads?
It is not yet a widespread practice, but it is not ruled out that the opportunities for small companies to go out for the most competitive words, with a gradual growth in prices, until the smallest agents are progressively closed.
Does all this mean that Google Ads should be forgod? No. It means that you have to step on the accelerator, take advantage of the need for gaps and opportunities, and make increasingly detailed and astute analyses to find those loopholes (which there are) that the largest have not been able to take advantage of.
- Optimize your CPC campaigns by looking for less exploited niches with exhaustive keyword analysis.
- Use Business Intelligence tools such as Power Bi or Tableau for your analysis of results, do not stay in superficial analysis.
- Integrate Google Ads data with your CRM, your call answering service, your web analytics tool…
- Don’t disdain Adwords Display, Remarketing, and Gmail campaigns.
- Improve ads through testing.
- Diversify your digital marketing budget to other platforms: Bing Ads, Facebook Ads, Twitter Ads…
- Always keep in mind the customer lifecycle (LTV) and try by all means to make it as much as possible.
… And it grows,it grows now, before it’s too late.