I'd like to buy a vowel
Google and other such companies auction keywords because multiple vendors may want to use the same ones. Individual words and phrases draw bids ranging from a few cents to over $20. The company allows a limited number of ads per search and your position in the list of ads on a page is determined by how much you bid — highest bidders get the best position.
Thralow knows exactly what his return is on the investment in AdWords because he uses cookies to track where his customers go on the site after arriving from a Google search page. Even if they don't buy on that first visit, but come back 45 days later and complete a purchase, he knows that they came to the site originally by clicking on a Google ad. It means he can track the success rate — not just of AdWords in general but of individual keywords.
With Google AdWords, he knows that every dollar he spends returns on average $3 — of profit. Compare that to the 60 cents profit-per-dollar-spent he received for magazine advertising. Buying keywords at shopping search sites such as PriceGrabber.com and DealTime delivers an even better return, but not anywhere near as much traffic.
Google, largely because of the enormous traffic it generates, is the single biggest item in Thralow's advertising budget — about $750,000 this year, representing 35 percent of his total ad budget. It's a tribute to the importance of Google, but it makes Thralow a little uneasy. "To me that's a big egg in a single basket," he says. "You never want to be too dependent on any one form of marketing, anymore than you want to be too dependent on any one customer."
Thralow also spends a significant chunk on Yahoo Search Marketing and other search engine advertising services, as well as pay-per-click ads elsewhere on the Web, sponsorship of related sites such as Birderblog.com and Amazon-like affiliate programs that pay a commission to other sites that sell Thralow products.
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