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It's not quite like that. What advertisers can afford to pay is margin X conversion rate. If people search for cheap socks and you have high margin socks, your
by netcan 13y ago
It's not quite like that.
What advertisers can afford to pay is margin X conversion rate. If people search for cheap socks and you have high margin socks, your conversion rate will be lower. In super competitive markets, the conversion rate is usually what makes one win. For something like insurance quotes, that probably means the one with a known brand, supporting advertising in tv & radio, etc.
The quality of the sites and the margins will probably be pretty similar among most players.
Where the dynamic you're describing happens is between product categories where you have a high margin per unit in one product category. Eg. If you want to sell a 'diy divorce kit with a $5 margin' you will have to outbid divorce lawyers who expect to earn thousands per client. The lawyers will drown everyone else out.
- jcampbell1 13y ago> The lawyers will drown everyone else out. The worst lawyers will drown everyone else out, including the good lawyers. The lawyer that has a high conversion rate by promising it will cost $5000, but ends up costing $30k drowns out the lawyer who legitimately quotes $10k. I agree, for certain searches, the ads are helpful, but I stand by the notion of avoiding SERPs with tons of high value ads. The person paying for those ads will likely be you.
- ericd 13y agoYeah, from what I've seen fraudulent advertising, bait and switch, and various other shady tricks are dominant strategies in adwords advertising within some categories, and I haven't seen any obvious effort by Google to curb it. If there was some way for Google to act as a reliable Better Business Bureau replacement, that rating would be a great addition to their ranking algo.
- AJ007 13y agoI don't know about the sock market, but there are lots of categories where the arms race for user revenue-maximization has either not yet started, or everyone is using very old techniques. A better example would be someone selling "cheap" socks but with expensive shipping. Or, aggressively upselling additional sock products in the checkout, possibly with FTC-unfriendly opt-in vs opt-out methods. Or, hammering their users with advertising after the sale by email and phone. When a particular vertical market gets aggressive, the item being advertised usually brings little, no, or negative revenue to the advertiser, and all of the money is made on the back.