In March 2002 iON posted its first Google AdWord campaign on a $5 a day budget.  Within two weeks we had an appointment set-up with Goldman Sachs in New York as a direct result.  Several transatlantic trips later, a bucket full of Irish charm and lots of long nights spent pouring over legal contracts and the world’s most prestigious bank became a customer of iON and still are to this day.

Since 2002 iON has spent around $500,000 on AdWords but this channel has never yielded the same success as it did in the mid 2000s. The reason? Attention became harder and more expensive to garnish. Competition increased as businesses woke up to the Pay Per Click channel and with it the price of entry to the channel rose substantially.

Fast forward to 2011 and it feels like there is another dotcom bubble.  E-Commerce is growing massively and the obvious way to get customer attention is to use Google AdWords.  But unlike 2002, big businesses use AdWords and they’re playing the long game, valuing the lifetime relationship of a customer and financial return that represents. Their motivation is often to win customers even if it’s not profitable on the first trade.

The net result is that a small business, reliant on the profit from one deal to fuel the next deal often can’t profit in the short term using the AdWords channel.  The cost of the AdWords campaign and eventual conversion of a customer, if viewed from the perspective of a single deal doesn’t yield enough margin.  The Cost Per Click bidding war has escalated the price of using this channel in many occasions to reflect the perceived value of repeat purchases of a customer.  This hike in bidding price is being driven by big business that can afford to play the longer game.

The old business mantra of Get Big, Get Niche or Get Out has never been more applicable to web businesses than it is now.  The dream of using the Internet and AdWords to reach a global audience gets more expensive the more commoditized your product or service is.  The solution for small businesses wishing to compete online and win a global audience is to use multiple channels, go super niche and innovate.