When the Google ad people approached us in 2007 offering to optimize our ad campaign, it sounded like a great idea. Google accounts for more than 90% of our ad budget and generates about 90% of our sales, and we have an excellent working relationship with them. So we let them fiddle with our keywords, bids, and campaign structure. We flipped the switch to implement the changes, and lo and behold, our revenues dropped 30% while our advertising costs rose 30%, literally overnight. I felt like I had killed the golden goose.
My company, Orb Audio, makes and sells round speakers for home theaters and computers. We sell direct to the customer at a fraction of the prices offered by big box stores. Our business is entirely online, which makes Google AdSense a logical partner in our ad campaign -- we've been working with them since we started the company in 2003. Back then, selling expensive items online was considered foolish. But as online sales have taken off, so, too, has our company. We've built up a long, successful track record, and my mistake was letting someone else make changes to an ad campaign that worked just fine.
Optimization was still new back in 2007, and what we didn't realize -- neither did the folks at Google apparently -- was that by altering our campaign, we lost the benefit of the four years of history we'd built up. Much like with search engine optimization (SEO), where longer-lived sites appear higher in Google search results, the longer-lived Google AdSense campaigns qualify for better rates and priority placements.
And there was no reset button. Once we'd implemented the changes there was no going back to the way things were. Going into it I thought that I could just press control-Z and have a do-over if thing didn't work out. I was wrong.
To make matters worse, if the optimization had worked, we would have only improved things incrementally. I'd basically put a successful campaign -- not to mention the entire company -- in jeopardy to make things just a little bit better. If I'd known the extent of the risks, I'd never have chosen to go ahead with it.
The impact was catastrophic -- we had to add $500 to $1,000 to our daily advertising budget of $1,500. Meanwhile our sales dropped $100,000 a month, for a little over six months straight. The economy starting softening around the same time, which makes it harder to pinpoint exactly when we finally got back on track, but it cost us a lot -- all because we chased after incremental improvement.
Google makes it right
We learned, though, that Google really is an honest company and we worked through the problem together. We showed them our books to prove that this was an overnight change directly related to the failed optimization rather than the worsening economy, and they repaid that trust by making things right. They took responsibility, and I feel I owe a lot of our success to how Google runs its business.
For whatever reason, they couldn't change things back to the way they were before the optimization, but they did provide substantial advertising credits to offset our increased costs and lost sales. I have to be honest that this did test our relationship with our most important advertising partner -- "Uh oh" is the sanitized version of what was going through our minds the day after the optimization went into effect -- but in the end it was the most honest and open business experience I've had.
Overall, the optimization was a huge blow to our 2007 and 2008 numbers, especially when combined with the economic downturn. But since then we're back on track -- we earned between $4 million and $5 million in 2009, and are on track to reach just over $5 million for this year.
Trust your expertise
I had no doubts at the time about doing what Google suggested. I assumed that their best practices would work for us. But while there are plenty of advertising experts at Google, I'm an expert at advertising round speakers on Google. I'd invested thousands of hours in the skill at that point, and I shouldn't have believed so quickly that they knew better than me what was best for Orb Audio. Not all best practices are best practices for us, and we learned that the hard way.
What are your experiences with Google AdSense?
Ethan Siegel lives in New York City with his wife and two children. In addition to listening to music played on his round speakers, he loves live music and has seen well over 500 concerts.
-- As told to Peter McDougall