Most expensive adwords: 80% are for financial services

One of the things about the Google Adwords system which is interesting, in my view, is that because it is an auction the price of words (and combinations of words) should reflect the potential economic return of a click on an ad.

So when I came across this very interesting post, I was more than a little surprised to discover the following about the top 50 adwords on September 11, 2006:

  • 62% are adwords relating to loans, consolidation of loans, or other loan products,especially student loans (by far the greatest majority)
  • 12% are for insurance, primarily auto
  • 6% are for other financial services
  • 4% are for healthcare
  • the remainder (16%) are for other services.

Isn’t that surprising? Some of you may remember my post earlier this year about Froogle, and the fact that no financial services products appear when you do a search. So it appears that financial services “gets” ads supported by search, but not product feeds at comparison sites.

Incidentally, I just tried a Froogle search again (in both the UK and the USA) to see if anything is different from the last time – I’m still getting an offer for a paper shredder when I ask for a credit card in the UK. Now, it seems, there are books on opening accounts, accepting credit card payments, and numerous other things available on the US site. Nothing, still, from major brand name banks.

And the price for the top adword, “loan consolidation”?  US$69.16 per click on September 11. Considering a 3% conversion rate (the number suggested by Peter S. Fader of the Wharton Business School for most online purchasing) I calculate an acquisition cost of just over $2300 per loan. Expensive, and clearly, you’d want quite a debt-laden customer to consolidate if you’re spending this much just to acquire, and before any other costs have been added in. 

2 Responses to“Most expensive adwords: 80% are for financial services”

  1. September 27, 2006 at 3:10 am #

    That is quite amazing actually. At an acquisition cost of $2,300, I don’t think its possible to ever make money.

  2. September 27, 2006 at 4:53 am #

    I know! Perhaps “Loan Consolidation” is being bought by those loan sharks that get 400%…

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