jatiN mahindrA doT coM

Google gained popularity with advertisers in part through the accessibility and affordability of their AdWords ad program, which made it possible for almost anyone to advertise online. When the ad platform was young and inefficient (due to limited competition) you did not need to be skilled to profit. You only needed a credit card and a decent website.

But over the years Google has made their system much more complex, and increased competition + better competitive intelligence tools + all the layers of ignorance tax baked into AdWords (default match type as broad, expanded broad match, automatic matching, search syndication & content network on by default, tons of click fraud on the content network, etc.) have made profitably running an AdWords campaign much more challenging.

Google has hundreds of thousands of advertisers, but over 80% of their United States ad revenue comes from the top 1.35% of advertisers, according to a recent study of keyword data by SEM Rush.

The above number might be skewed toward larger advertisers due to the limited size of the SEM Rush keyword database, but the additions of expanded broad match, automatic matching, and quality scores means that the top advertisers are more likely to show up on longtail keyword search queries as well. And the limited database which over-represents some larger advertisers also misses inactive accounts and micro-advertisers which would likely mean that 80% of Google’s ad revenues are coming from closer to only 1% of their advertisers (rather than the 1.35% in this data sample).

Why do brands sort out the cesspool, as Eric Schmidt fondly states?

• brands provide most of the ad dollars
• creating a brand typically requires buying a lot of awareness via advertising
• branded keywords can be expensive
• ad waste, fraud, and sloppy account management by brands can be justified as a brand spend, and is under less scrutiny than ad spend of direct marketers

More Google AdWords advertiser data from SEM Rush after the jump

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