Service drains competitor's Adwords budget
As opposed to how VC's drain competitor's adwords budgets?<p>Meaning, this is too often how I see competitive bids going over time:<p>1) You sell a widget for $100, and it costs you $50, so you spend $10 on the ad, & make $40 margin.<p>2) Your competition gets in, & has similar price/costs, & bids $11 on the ad.<p>3) After a few iterations, you both bid $49.50 for the ad, making near zero (positive) margins & stay in business.<p>4) But, VC-backed businesses enter that market.  The VC (rightly) tells the startup that they aren't going to make profit in the first year anyway, but they MUST show user-growth.  And, here's the VC money to pay for user growth.<p>5) So, the VC-backed startup bids the ads up to $100+, far above profitability for legit bootstrapped or existing profitable companies.<p>That's how the ad budgets can be drained in the ecosystem.<p>I know a lot of investors here that don't want to take the blame for this impact and may downvote me, but I do see this happening for many keywords over time.  I don't need to be popular on this issue.