Cost Per Click Pricing Continues to Narrow

Aug 3, 2015 by Mark Maier

If you thought you could still get a screaming deal on cost per click advertising on Mobile, think again.  The rates are narrowing according to MediaPost...

"Google and numerous reports released earlier this month from search advertising agencies confirm that the gap between desktop and mobile continues to narrow. Here's one more from iProspect. The search agency reports that the cost-per-click (CPC) prices on many keywords show a 31% increase in the price of each click in the second quarter, compared to the year-ago quarter, with notable inflation happening across all devices.

The increase in each click on mobile, along with a 32% rise in click-through rates (CTR) YoY, drove marketers to spend 11% more on paid-search advertising in Q2 2015 compared with the year-ago quarter.

Mobile drove growth, especially in retail, where the media made up more than 25% of overall retail traffic and showed a 21% increase in clicks. iProspect attribute the leap to a maturing market and the advancement of analytics to help illustrate the value of mobile.

Although search agencies and engines have begun to see more referral traffic and dollars spent coming from mobile, iProspect reports it doesn't expect to see the same shift for paid search among its clients until 2016.

Meanwhile, across retail paid-search campaigns running in Q2 2015, companies saw 36% fewer impressions and a 13% drop in clicks resulting in a 36% higher click-through rate (CTR).

Consumer electronics followed a different pattern, with click volumes and CTRs increasing 7%, while impressions were flat. Marketers spent 1% less on campaigns and 8% less in CPC.

Overall, impressions and click volumes fell substantially from past years, driven primarily from the decrease in demand for computer search. While mobile search continues to grow, it is unable to regain all that has been lost, according to iProspect.

The smaller on-page inventory for ads on smartphone search result pages reduces the number of advertisers serving ads for each individual search. The agency attributes the drop in impressions to less total keywords in auction, but that the keywords available command better results for the advertiser.

While smartphones work to take up the slack, the decline on computers outweighs the momentum of mobile. The fall of click volumes to 25% and impression volume to 43% YoY seemed to force media spending on computer campaigns also to fall 4% in Q2 despite a 29% increase in CPCs and a 30% increase in the CTR."

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