Mesothelioma

It’s no secret that Google has been trying to diversify its revenue stream away from clickthrough advertising, which historically has accounted for the overwhelming majority of its income.

How else to explain Google’s shopping spree over the past decade, scooping up a veritable smorgasbord of industry players like these:

AdMob (mobile)
Adometry (attribution)
Channel Intelligence (product feeds)
DoubleClick (display)
Invite Media (programmatic creative and media buying)
Teracent (programmatic creative and media buying)
YouTube (video)
Wildfire (social)

So the next question is, “How much have these acquisitions and investments done to diversify Google’s sources of revenue?”

The answer: Hardly anything.

Consider this statistic: In 2011, nearly all of Google’s revenue came from online pay-per-click advertising, as reported by SEO firm WordStream.

Now let’s look at 2014 figures: WordStream reports that the percentage of Google revenues from pay-per-click advertising is actually higher than in 2011, at 97%.

So much for the “diversifying effects of diversity.”

Within PPC advertising, a number of keyword terms are continuing to haul in the big bucks for Google. A few years back, the priciest keyword term of all was mesothelioma, at more than $100 a click.

Mesothelioma continues to attract a lot of ad dollars, but it’s no longer commanding $100 a pop as it once did. In fact, it’s no longer on the Top 10 most expensive keywords list.

That list looks like this now (in descending order of bid pricing, starting at over $50 per click and dropping to “only” around $45 for the #10 keyword):

Insurance
Loans
Mortgage
Attorney
Credit
Lawyer
Donate
Degree
Hosting
Claim

In developing the ranking, WordStream determined which keywords reside in the stratosphere by compiling data from its own large keyword dataset and the Google Keyword Tool (over a 90-day period) to determine the 10,000 most expensive keywords.

These were then organized into categories like “credit” and “insurance” by weighting the number of keywords in each category, estimating the monthly search volume as well as the average cost-per-click for each keyword.

Notice the preponderance of financial and legal terms – both of them key to sectors that attract and manage a ton of money.

The word degree is right up there, too, underscoring how important the educational complex has become to the ad business.

It must be pretty unappealing to be active in these industries and have to pony up such big dollars to participate in the pay-per-click advertising space. But how else do we think Google racks up annual advertising revenues that are north of $32 billion?

How does the market sort out which keywords are worthy of commanding $40 or $50 per click? Essentially, it boils down to this: Invariably, the most expensive niches paying for the most costly keywords are ones with very high lifetime customer value – where the customer pay-off is high.

Think about it: The amount of money an insurance company gets from an individual signing up for coverage makes the high cost-per-click rates – even at $50 a pop — worth it.

Business observers point to long-range trends that may make search engine marketing increasingly irrelevant as the growth of multichannel, multi-device marketing picks up steam.

But don’t hold your breath; Google will likely be earning billions off of pay-per-click advertising for years to come.

How much is one clickthrough to your web site worth? If you’re a legal firm specializing in bringing mesothelioma cases to court, it turns out it’s worth a lot.

In fact, the search term “mesothelioma” was the highest-priced keyword in the U.S. during the third quarter of 2009. That’s according to a recently-released AdGooroo Search Engine Advertising report.

Just how expensive? For Google’s AdWords program, the highest price paid for a #1 ranking on that search term was a whopping $99.44 per click. (Over at Yahoo, the high figure for this paid search term was a little less rich: $60.68 per click.)

One wonders how many times the advertisers have actually had to pay out this king’s ransom. Whether it’s for a few or many clicks, it’s clear that some legal firms recognize a highly lucrative revenue opportunity in filing mesothelioma lawsuits related to asbestos and lung cancer.

Interestingly, the highest paid search term in Bing’s paid search program isn’t “mesothelioma,” but rather “auto insurance comparison.” At $55.20 per click, the dollars aren’t as high, but it would seem like the potential payoff isn’t nearly as great, either. After all, there’s a pretty big difference between a multi-million dollar legal verdict and the value of an automotive insurance policy.

But beyond the eyebrow-raising stats of these extreme examples, the larger issue is how much more costly search advertising has become in recent times. A few short years ago, it was common to talk about search terms costing an advertiser 50 cents or $1.00 per click. Now, those same terms are far more likely to cost $2.50 or more.

Google, being the 500-pound gorilla in search engine marketing (SEM), has certainly contributed to the price inflation. That’s one reason why many are rooting for alternative search options like Bing to succeed (dream on).

More fundamental to the increase in keyword click pricing is the realization that advertising to people at the precise time they’re searching for particular goods and services is a far more effective way to engage customers and prospects and drive actual sales.

And that’s even more the case compared to trying to get their attention or otherwise “intrude” on them when they’re online for other purposes. The abysmal clickthrough rates experienced for banner advertising bear this out.

But paying $100 per clickthrough? That does seem excessive – even for ambulance-chasing lawyers!