5 years ago a Google ads campaign can turn $1 into $5 3 years ago it turned $1 into $3 but today businesses are losing money faster than ever before over the past 5 years the average advertising cost for retail Brands running Google ads have increased by 40 to 50% in just the last year alone retail search and cpcs Rose in additional 20% for the median Advertiser now major agencies are quietly dialing down ad spend for their clients on the Google platform but no one is talking about why this isn't another how to fix your Google
ads video this is about understanding the biggest shift in digital marketing that is crippling Google search and its ad business what you will learn in the next 10 minutes could save your marketing budget and possibly your business now I've been running Google ads from my seven figureure e-commerce store bumblebe linen.com for over 17 years in addition I host a seller Summit an annual e-commerce conference that's been going strong for the past 9 years and through my podcast I've had the privilege of interviewing over 500 top e-commerce entrepreneurs I talk to a lot of online store
owners and this year has been especially rough businesses are struggling and many are barely hanging on it is harder than ever before to operate a Google ads account compared to just a couple years ago but what's changed the biggest issue is that over the years Google has gradually taken control away from The Advertiser pushing this idea of let us do everything for you automation will handle everything with AI and smart machine learning but the reality it's not as easy as they promised now let me take that back it's actually super easy to launch an advertising
campaign now but you're basically at the mercy of Google to halfhazard spend your money with very little transparency now to be fair the economy is softening this year and we're likely heading into a recession but almost every business owner I've spoken to has been getting much worse results from Google so why exactly are Google ads going to crap well part of this is increased competition but if you've been following the news you know that Google has an an anti- trust case right now and there have been a lot of whistleblowers a few Executives have revealed
that Google quietly increases ad prices to meet targets and this is how they're doing it whenever you run a Google ad and bid on a keyword Google sets what is called a floor price if you don't bid at least this minimum amount you're not going to get any clicks now in theory Google ads run on a bidding system so let's say you're in an obscure industry that doesn't get a lot of search volume like wedding handkerchiefs and Wyoming just as an example you could be the only person in the world advertising on this search term
and if Google was a true bidding system you would only have to bid a single penny to show up in search but that is not the case Google sets a minimum bid the minimum bid is what's going to cost you just to get an add up even with zero competition now realistically there are actually very few IND industries that I can think of that have zero advertisers but Google whistleblowers have revealed that Google has been artificially raising this floor price for years hey Sergey and Larry we're short about 100 million bucks for our quarterly earnings
report how about we jack up the cost per click by about 10 cents and beat Wall Street estimates this my friends is not natural competition this is Google just increasing their price because they can but the kicker is that these price increases are silent they do all this behind the scenes without advertisers being aware of it and that in turn greatly inflates the price of ads check out this graph of Google's advertising revenue from 2001 to today now Google can technically do whatever the hell it wants but here's the thing there's been very little innovation
in Google ads in the past several years and they just been turning up the dial on price and milking the cow for everything that it's got Google was awesome 5 years ago they were very supportive to advertisers and I've taught Google ads for many years if you had a problem they would be there to help you fix it but there was a pivot many years ago where their support no longer was real support all of a sudden my Google reps started becoming salesman now if you run an e-commerce business for any length of time you've
likely gotten emails from Google reps claiming to offer free help on their ads platform and I used to actually hop on these calls and get free help but several months ago I hopped on a call and it was literally a rep who did not know how to run Google ads very well trying to push new features to get me to spend more money the rep I spoke to literally had never run an ad for a business in their life yet here they were pitching me new features like it was the next big thing every rep
follows the exact same script they want more ad revenue and they'll encourage you to try something new and make it sound extremely easy try YouTube ads never mind that it costs an incredible amount of money and effort to get a profitable video ad running today I won't even talk to a Google ads rep there are probably a couple good ones out there but most of them are a waste of time they're all scripted salespeople this was not the case 5 to 10 years ago at some point Google made the decision to grow Revenue at all
costs at the expense of support by the way if you're interested in learning how to start your own profitable online store make sure you sign up for my free 6-day e-commerce mini course below that will walk you through everything you need to know it's free and then there's PX Google performance Max is a goal-based advertising campaign that allows advertisers to access all of Google's inventory like YouTube display search and more through a single campaign and it uses machine learning to automate and optimize ads in real time across various channels to maximize conversion performance sounds great
right let Google handle everything and watch the profits come in but the problem is that Google provides little or no visibility into how your money is actually spent and they make it really hard to control the key words that you're paying money for advertisers have been asking for years for more detailed expens reports to no avail and it just seems that Google wants to keep things obscure so they can get rid of their junk ad inventory undetected Google pmax is one big gigantic blackbox you put money in and Google decides how much to display your
ads with little or no transparency now as a public company Google is constantly Under Pressure to grow their Top Line and with their lack of innovation it's been impossible for them to grow without increasing ad costs under the table now I'm sure the shareholders are happy I'm sure the executives are thrilled at the numbers but advertisers are not advertisers are being squeezed when your costs for advertising are up double digits year a year guess what happens one you can't spend the same amount of money you did last year and get the same results and two
you literally have to increase your budget and pass the cost along to the consumer in the form of inflation now here's the other Insidious thing that I've noticed about Google and their business practices and this one is a little bit more subjective so just bear with me back in the good old days Google used surpri themselves specifically on how quickly their search engine would find you an accurate answer but now you either have to specifically invest more time just to scroll past their ads or just trust that the ads have what you want but spoiler
alert they do not otherwise the useful links will be at the top organically without having to pay to get there over 10 years ago Google sponsor links used to be highlighted in yellow indicating to the user in a very obvious way that these weren't organic search results so that you could just filter them out not anymore now the sponsored search results look exactly like the genuine search results apart from a tiny little much less obvious sponsored text and all that is just for when you're searching for answers look what happens when you start searching for
products recently I've been shopping for a thin power bank for my gadgets and just look at the results a big Carousel shopping ads dominates the search results and it's actually quite overwhelming these product listings are taking up more real estate on the results page than ever before and according to search engine land shopping ads make up nearly 45% of the search results today which is a 20% year-over-year increase now keep in mind I just want the thinnest possible power bank and usually I skip the ads because they are dominated by companies selling cheap Chinese knockoffs
like timu AliExpress or whoever is willing to pay Google the most money so what happens when I scroll down and look at the organic results all right first up is Amazon if I click all I see are random Chinese Brands I've never heard of so next now I see posts from The New York Times wired and ZDNet who are generically rating the best power banks these are obvious affiliate marketing playes so no thanks now to be fair there are a couple of relevant companies on the front page but by and large I'm inundated by a
page full of Google shopping choices where I have to click into each ad just to see if it's something that I want and the sheer range of choices is overwhelming and it's confusing right Google with all of its resources and artificial intelligence crawling the description pages of every product in existence clearly has the ability to take me straight to the single best rated product for exactly what I'm looking for right all it has to do is compile the three thinnest power Banks based on the dimensions in each product description with the best reviews and give
them to me without a million Google shopping ads right and yet does it not seem a little like Google's playing dumb here does it seem to me like the search results are purposely designed to make you click on links to do more research meanwhile if I ask chubbt I get an immediate answer now when you look at Google's business model it makes sense Google doesn't make more money if you find the perfect product it's not like they're out there hoping you'll have an awesome Google experience and then you'll go recommend Google to five of your
friends no Google makes money from your clicks Google's ideal situation is that you click on a million sponsor links and then make your decision and because Google owns search sellers have to pay Google to be part of the sponsored buying section now I can't prove any of Google's true intentions but flooding the user with a million choices that are either relevant or irrelevant is probably making them a lot of money and is it just me but are most of the organic search results pure affiliate marketing articles that don't answer your question either it's almost like
Google's making the organic search results bad so you'll click on an ad instead of giving me a New York Times article about generic power Banks how about giving me an AI overview of all the thinnest power Banks available but here's the main reason why Google's ad business is collapsing and that has everything to do with artificial intelligence the only way Google can make Wall Street estimates is to squeeze sellers meanwhile Google is being attacked on all sides by AI open AI recently announced search upt and meta just released yet another free open source AI model
why come through a bunch of links when you can just get an answer directly from AI if Google doesn't change they are going to get disrupted after all they can only squeeze sellers so much before the dam breaks and once search usage starts to decline so will interest in Google ads now that you understand what's going on with Google watch this video here to learn on Amazon is doing the exact same thing and jacking up prices for everything that you buy
