Google’s AdWords program is basically an arms race
I just started using Google AdWords to advertise my software products. It seems to be attracting more business and it’s a reasonable model. What I’m discovering is that it’s really an arms race between you and your competitors to get control of keywords. You specify a maximum “bid” for each keyword or phrase and that determines it’s placement in the advertising column of Google’s search results. Typical keywords can go for between 10 cents and a dollar. The problem is that Google pits you against your competitors when you are using the same keywords. e.g. I placed a bunch of words/phrases into my “campaign” at a certain price point and they were all active. When I came back the next day to check on them, they had all been de-activated and it was asking me to offer more money to re-activate them. Some of the words which started out at 10 cents are now asking me for $5 (that’s the cost to me of a single click) to re-activate them. So it’s basically like ebay where the craziest person wins. I obviously can’t afford to pay $5 per click for software products that cost $10 each and probably only generate a single sale for every 20 or so clicks. So by creating an ad campaign against my competition with those keywords, I’ve pushed up the price of those words to the point where I can’t use them any more and I’ve probably made it rather uncomfortable for my competitors as well. Google uses the same ad campaign for some other advertising activity which doesn’t seem to be affected by these minimum bids, but it’s certainly disappointing to see most of my advertising get expensive or disabled within a matter of days.
Now I see how Google earns all of their billions 
