How much advertising budget does a specialist clinic allocate each year? A staggering S$500,000! A clinic I met last night spends S$180,000 on Google Adwords alone. If what she’s says is true, her campaign manager (lets call them Company A) is scamming her – a Google-appointed authorized Adwords reseller no less.

There was no proper contract but just a one-piece, invoice for the following:

1) Web hosting for 1 website

2) Renewal of 3 domain names

3) Adwords campaign (ad spend, keyword analysis, management, etc)

The invoice amount? S$105,000 for one year!

Let’s estimate how much Company A makes from the clinic…

1) Shared hosting = S$40/year

2) Average renewal fees for 3 domain names = S$60/year

3) The campaign targets 3 markets – Singapore, Malaysia and Indonesia. Do note that the clinic has virtually no competition advertising in Malaysia because it’s illegal for doctors there to promote their services.

It’s safe to assume that 90% of the clients are Singaporeans because the clinic is located here. The clinic gets 3~4 new clients per day and let’s further assume that half of these clients came from Adwords.

Based on experience, I think it’s safe to assume a 10% conversion rate hence:

Total Clicks Received = 2 clients / 10% = 20 clicks/day.

Now let’s assume that each click costs S$5 hence:

Annual Ad Spend = 365 days x 20 clicks x S$5 = S$36,500

Hence, the fees pocketed by Company A after costs is S$68,400.

Being an appointed reseller, Company A gets commissions from Google for the ad spend. In addition, the clinic added that they’re billed additional invoices in-between, and the final amount is closer to S$180,000!

Unfortunately, that’s not the end of the story. Company A also manages the Adwords campaigns for 5~6 of the clinic’s competitors – how does she prioritize who ranks tops? Talk about conflict of interest.

Also, Google Adwords is successful because of features like detailed reporting, the ability to set CPCs and daily budgets, and the flexibility to stop a campaign at anytime. This poor clinic is definitely not enjoying any of the benefits. They are not given performance reports, they don’t know how much money actually goes to their campaign and they have to commit for one whole year.

Other campaign management companies like Purpleclick and Bain & Mercer have approached the clinic to explain the above but to no avail. Company A seems to have a well-thought strategy of taking advantage of the clinic’s ignorance and the “kiasu” factor – since my competitors are advertising, I don’t want to be left out.

Of course there’s a lot of assumptions and it’s based on the clinic’s story alone (I saw Company A’s invoice by the way). But I think this case deserves a look by Google because if such irresponsible situation is common, it will only erode the confidence in their fine Adwords platform.

As for me, I’m definitely going to investigate this clinic further see how far it goes. Stay tuned!