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SEM disadvantages: when to avoid SEM?

Just like political promises, so does SEM sometimes fail to deliver. The biggest problem with SEM (and AdWords) is its cost. The never-ending expense of maintaining competitive positions and paying for every click on your link in sponsored search, lays waste to your company's budget.

Bidding has the effect of constantly elevating costs. When those costs surpass your budget, your site and ads stop appearing in search results. The effects of this situation are immediate - dramatic drop in page visits and sales.

SEM has also a few other cons. We recommend that you learn about them prior to embarking on an SEM campaign. Check whether SEM tactics are truly more beneficial to your strategy than e.g. SEO.

SEM drawbacks include:

SEM and market overcrowding with too many ads

Just like in our favorite example of too many TV ads, a similar tendency occurs with online advertising (including AdSense campaigns). Nonetheless, because of the large amount of online content, internet advertising ROI is still significantly better than the ROI of TV ads.

According to BusinessWeek and Forrester Research 78% of advertisers admit that conventional advertising is less and less effective with each new year. Similarly, Ephron & Pollak showed that the average returns from each dollar spent on TV ads is only 87 cents! - what a marvelous way to spend money.

Coincidentally, it's not hard to foresee that the rate with which online ads are created and packed into every corner of the monitor, their sales effectiveness will soon fall to the levels equally marginal as those of TV ads. One can not shove 40 ads into a body of online copy and believe that the reader won't ignore them in favor of the page's content.

Already average AdWords CTR hovers between 1-7%. While it isn't a bad ratio considering the amount of web users, it is a significant drop from the time of web's infancy when banner ads commanded 20% CTR.

This drop occurred because of market saturation. So, in choosing SEM tactics one must remember that with time the more online ads that appear, the less effective they will be in attracting sales.

SEM and less visits

Links and ads appearing under a 'sponsored results' tab attract less web users. The reason is obvious; users search on Google to find objective, unbiased and relevant information, not ads.

Everything that carries with it a 'sponsored by' tag bears the stigma that it is there only because it paid to be there, it isn't as relevant and it's there to steer you away from the true content you seek.

That is why websites that appear in the main search results attract a significantly larger percentage of visitors and generate a larger amount of clicks. But, SEM won't help you appear in the main search results. In organic search, SEO is king.

SEM and overbidding on keywords

Regrettably, because there are many competing firms bidding on the same keywords in an effort to gain the top position, oftentimes even mediocre keywords become unreasonably expensive. For example, in AdWords campaigns companies tend to bid above their competitions' limit in an effort to outrank them. In so doing, all companies loose. Only Google (or another search engine used) comes out profiting.

Some companies overbid on keywords in an effort to eliminate their competition. If done successfully, then with time they can drop keyword prices for themselves. Other companies overbid out of ignorance and lack of foresight.

Regardless of reason, consequences are the same. Everyone bears the burden of paying more for keywords that don't necessarily even perform well, but because of aggressive tactics their prices are inflated.

Overbidding on keywords also proves detrimental in obtaining high placement in sponsored results for many firms. Not every company has the means to pay 5$ for every click and thus reach top spots. That is why SEM sometimes can cause the same headaches as SEO, with the sole difference that in SEM you still have to pay for each click.

Some advice

Before you proceed with an SEM campaign, consider which positioning strategy is better for your company. Consider whether SEO or SEM has a higher chance of proving most useful in helping you meet your objectives in the long run. In the end, align your website positioning tactics with your goals.

Unsure where to start?

Contact us for a consultation. Have SEO Magma answer any question you might have about SEM and about building successful AdWords campaigns.

If the ideas presented above are unfamiliar to you, then we invite you to read the Purpose of website positioning: how to use SEO and SEM where we explain SEO, SEM and the differences between them in greater detail.

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