The rules of supply and demand are pretty simple, as demand goes up supply goes down and costs go up. This principal effects CPC and search advertising. It seems like marketers feel some sort of pressure to get their ads to the top of search results today. The pressure to be at the top has increased CPC to the highest it’s ever been, and it’s only forecast to keep rising.
iProspect is a digital marketing agency that manages more than 1,800 AdWords accounts. Because of this, they were able to analyze the trends in CPC. Their data shows that in second-quarter 2017, CPCs rose 36%, and with the previous quarter, they rose 13%. This is the highest CPC have been since 2014.
iProspect has some theories as to why this increase happened. Like I stated before, the increase in competition for top search spots definitely plays a factor, but that’s not all. Google made updates to its Ad Rank calculation in May. This update prioritized keyword bid over ranking factors like the quality score. iProspect’s report says, “in the past, quality score has played a major role in keeping CPC low for trademark keywords”. “Because the latest update has reduced the weight of quality score, that factor provides less of a counterbalance.
At the moment, desktop CPCs are still higher than mobile, but this is expected to change sometime soon. Mobile CPCs have been consistently rising since the beginning of 2016 because mobile definitely gets a greater number of clicks compared to desktop. “iProspect notes that among its clients, 60% of clicks now come from mobile, compared with 32% from desktop and 8% from tablets.”
It is believed that because of the rise in mobile CPCs, the number of mobile clicks has actually been declining. Mobile plays a huge part in revenue for Google AdWords. If you are interested in more statistics on CPC and search advertising you can read here. Ultimately, There are many factors that go into the cost and effectiveness of Search ads and right now, CPC is the highest it’s ever been.
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