August 24, 2009

LookSmart Launches Optimal Pricing PPC Model

LookSmart has introduced a new pay-per-click pricing method they've dubbed Optimal Pricing. The model prices according to traffic type, quality, and volume based on aggregate keyword search traffic on the LookSmart Advertiser Network.

"LookSmart is focused on delivering search advertisers the most effective advertiser networks and services for reaching customers outside of the big three search engines; building Optimal Pricing into the AdCenter platform is a major advancement to that end," said Ted West, CEO and President of LookSmart. "Optimal Pricing is consistent with our longstanding track-record of innovation and improved search advertiser performance."

Optimal Pricing also uses advertiser campaign objectives and network structure to give each advertiser an opportunity to bid on the most valuable traffic at all price points. The goal is to provide a better cost-per-conversion for their customers.

What do you think about Optimal Pricing? Let us know by leaving a comment.

Posted by Nathania Johnson at 3:00 PM | Permalink | Comments (1)

July 16, 2008

SEW Experts: When Being First Isn't Worth It

A new report from AdGooroo shows that, generally speaking, for short keywords it's not profitable to bid your way into the high positions. These types of keywords actually lose money in the first and second positions, but longer keywords can do well near the top. In today's Web analytics and ROI column, "When Being First Isn't Worth It," Eric Enge shows that by testing this idea on your campaigns, you stand to create more profitable PPC campaigns.

» Full story

Posted by Kevin Newcomb at 12:00 AM | Permalink | Comments (0)

April 17, 2007

AdWords Announces Preferred Bidding Feature

A new feature at Google AdWords has just been released globally, and will be known as 'preferred cost bidding' or 'preferred CPC bids'. This new feature allows advertisers to specify the average cost per click or CPM (cost per thousand impressions) they want to pay within their AdWords campaigns.

Google says the feature was added in response to "advertiser demand for greater control over how they manage their bids and costs", and expects that advertisers will be better able to maximize ROI.

The AdWords algorithm will work constantly to achieve the target price set by the advertiser. The average price model is designed as an alternative to the existing maximum bid system, which often forces advertisers to pay more up front, based on the competition, and aim for an average cost per conversion instead.

By agreeing to an average cost per click or impression, advertisers should be able to feel more confident in their CPA targets. However, this could potentially mean advertisers will have slightly less control over positioning, which may also affect conversion rates.

Only time and testing will tell for many advertisers.

Posted by Elisabeth Osmeloski at 12:00 PM | Permalink

February 2, 2007

Affiliates and PPC

Are affiliates the cause of high PPC search ad costs for merchants? In his latest ClickZ column, Kevin Lee discusses the tactics merchants are taking to prevent affiliate arbitrage.

According to Lee, merchants have been cracking down by placing significant restrictions on affiliates' bidding activities. He thinks it's imperative for merchants to police their affiliates' actions in the paid search arena, since "opening the door even a crack may encourage creative cheaters."

Posted by Kevin Newcomb at 12:27 AM | Permalink

January 19, 2007

Are You Undervaluing Traffic?

Many marketers aren't able to quantify The Value of Online Traffic. According to Bryan Eisenberg, the problem isn't that online traffic costs are increasing, it's that they cost so little to begin with. Things that cost little are perceived to have little value.

Posted by Kevin Newcomb at 8:27 AM | Permalink

November 2, 2006

In UK, Google To Surpass Channel 4's Ad Dollars

The Independent reports that Google UK is expected to earn "£900m from the UK ad market in 2006." When compared to Channel 4's "£800m at the TV group" this year, Google is expected to beat this TV player in ad dollars. Channel 4's Andy Duncan said, "Some broadcasters have been very slow to realise this. The industry as a whole is frankly rather backward-looking and is perhaps underestimating the scale of change that is going on and the pace of change."

Posted by Barry Schwartz at 8:59 AM | Permalink

October 3, 2006

Cost-Per-Keyword Increases Slightly In Q2

MediaPost reports that keyword prices for the second quarter have pretty much remained flat from the previous quarter. The DoubleClick's Performics study showed a slight increase in the "cost-per-keyword" of 14 cents or about 0.5 percent. The number of clicks grew 32-percent year-over-year, with "active keywords" growing almost 50-percent.

Posted by Barry Schwartz at 8:26 AM | Permalink

July 18, 2006

Keyword Prices Continue To Fall: Down 8.6 Percent

Fathom Online released a keyword price index update that shows keyword prices fell again quarter over quarter by 8.6 percent. Prices on average fell from $1.39 on March 31 to $1.27 on June 30. Last report also showed keyword prices dropping $1.43 at the end of 2005 to $1.39 in the first quarter of 2006, but folks blamed seasonality for the price drop. The reason for this drop? Marketers are bidding smarter says Matt McMahon, VP Marketing Services at Fathom.

Posted by Barry Schwartz at 12:25 PM | Permalink

June 26, 2006

Cost-Per-Keyword Drops In Q1

MediaPost reports that the cost-per-keyword has dropped from around $30 in the first quarter of 2006 to "the yearly high of $59 last December." The data comes from a DoubleClick study, which also shows that the "cost-per-keyword was nearly unchanged from the first three months of 2005 to this year's first quarter." The number of clicks (up 24%) and number of keywords did rise from the year-over-year data.

Posted by Barry Schwartz at 9:49 AM | Permalink

June 16, 2006

Yahoo To Reduce Search Ad Minimum Bid In UK To 5p?

I reported this morning at the Search Engine Roundtable that Yahoo may be reducing the minimum bid price from 10p to 5p. A WebmasterWorld member claimed to read the news in Interactive magazine that Yahoo will be reducing the minimum bid due to competition from Microsoft.

Posted by Barry Schwartz at 9:44 AM | Permalink

May 29, 2006

Free New AdWords Alerts Service

A free alert service kicks off with two alerts related to Google AdWords and AdSense. You can get daily email alerts with the costs of the expensive AdWords both by bid and by cost per day (not necessarily the most expensive, since Google doesn't report that. Instead, you get terms checked and found to be fairly pricey). There's also an alert by keyword service that emails you when new advertisers appear for a keyword you supply. Assuming you don't mind a flurry of email when tracking popular categories, this can be handy.

Posted by Detlev Johnson at 1:11 PM | Permalink

April 26, 2006

Online Advertisers Can Only Handle PPC Price Increase of Less Than 30%

Adotas reports on a presentation made at SES Toronto, where SEMPO said that 80% of PPC advertisers could only handle a 30% or less increase in cost-per-click prices. This is a huge concern, considering the study also shows that three-quarters of these advertisers have seen an increase in CPC prices over the past year already.

Posted by Barry Schwartz at 8:13 AM | Permalink

April 17, 2006

Keyword Prices Drop Slightly In First Quarter 2006

Fathom Online releases a report that shows that keyword prices, on average, have dropped from $1.43 at the end of 2005 to $1.39 in the first quarter of 2006. The price drop was "not surprising" according to Fathom Online, stating that Q4 prices were higher due to the "seasonal nature of advertising."

Posted by Barry Schwartz at 1:38 PM | Permalink

March 27, 2006

Some Of Google's Most Expensive Keywords

Via Xooglers, "Updated: Highest Paying AdSense Keywords" from CyberWyre has a nice of some of the some expensive keyword phrases you can buy at Google (probably at Yahoo also). Many of these keywords I believe once were almost a $100 per click. Here is the list at its current state. Keep in mind that these come from an auction pricing environment, so prices can change quickly. Also bear in mind that there might be more expensive terms. Google itself provides no tool to see the most expensive term it is selling. Instead, you have to check on terms you think are likely and compare them to other guesses.

• $54.33 mesothelioma lawyers
• $47.79 what is mesothelioma
• $47.72 peritoneal mesothelioma
• $47.25 consolidate loans
• $47.16 refinancing mortgage
• $45.55 tax attorney
• $41.22 mesothelioma
• $38.86 car accident lawyer
• $38.68 ameriquest mortgage
• $38.03 mortgage refinance

Posted by Barry Schwartz at 9:04 AM | Permalink

February 22, 2006

Cost Per Keyword Spikes to $55 During Holiday Season

A MediaPost article reports on DoubleClick's Performics data released recently that shows the overall "cost-per-keyword" "rose to around $55 in December, from around $26 at the end of August." The "cost-per-keyword" is made up of "cost-per-click with the volume of clicks," which basically represents the cost of all the keywords and clicks for an advertiser over a month, divided by the number keywords in an advertisers bucket. A 107 percent increase in click volume from the fourth quarter of 2004 also helped the cost per keyword to rise to $55. Keyword prices are expected to level off somewhat, since the holiday season is over.

Posted by Barry Schwartz at 9:51 AM | Permalink

February 9, 2006

Closing CPC Price Gap or Irrational CPC Buying

John Battelle wrote a post where he cites a recent Blue Nile earnings statement

I have a client in the diamond industry, and he was ready to jump into the PPC game but pulled out just before. What was his reasoning? He was concerned with PPC fraud. But what was I worried about? I was worried about a dozen other people, like my client, getting into PPC at the same time (i.e. Valentines Day season). All these inexperienced people bidding on expensive keywords, doesn't mesh well with me. I am with Blue Nile's CEO Mark Vadon on this one.

Posted by Barry Schwartz at 2:07 PM | Permalink

January 20, 2006

Are Search Advertisers Paying More than they Need To?

Kevin Newcomb reports in the Clickz story: Search Ad Auction Models Flawed, Economists Say, that a new research paper reports that, "advertisers who bid what they're actually willing to pay end up paying more than they need to."

"We want to educate advertisers about the fact that in some sense they are being taken advantage of," Ostrovsky said in a statement. "Under the current mechanism, if they don't think carefully about their bidding strategies, they can end up paying a lot more to the search engines than they need to."

Good read with lots of facts and interesting quotes. Especially useful to those new to search marketing. The research was authored by Michael Ostrovsky a economics professor at Stanford, Benjamin Edelman, doctoral candidate in economics at Harvard, and Michael Schwarz at UC Berkeley.

The paper is titled: Internet Advertising and the Generalized Second Price Auction: Selling Billions of Dollars Worth of Keywords, and can be downloaded here.

From the abstract: We investigate the "generalized second price" auction (GSP), a new mechanism which is used by search engines to sell online advertising that most Internet users encounter daily. GSP is tailored to its unique environment, and neither the mechanism nor the environment have previously been studied in the mechanism design literature.

Posted by Gary Price at 5:16 PM | Permalink

January 17, 2006

Search Spend Was Up Last Quarter

New online spending stats from a Deutsche Bank survey of 60 media executives found that last quarter (Oct-Dec. 2005), 65 percent said paid search spending increased compared to the third quarter. Google got 57 percent of spending, with Yahoo 23 percent, followed by MSN at 5 percent. Average cost per click was estimated at 58 cents, though the report added a caveat that it was difficult to guage this price accurately for various reasons. More details from Online Ad Spending Surpasses Expectations at MediaPost.

Posted by Danny Sullivan at 9:25 AM | Permalink

January 9, 2006

Search Engines As Leeches, The Difference Between Paid & Free Listings & Keyword Price Rises

Jakob Nielsen's just posted a Search Engines as Leeches on the Web article that makes a good point, don't be too search engine dependent. However, he muddles his point by confusing the issue of paid search advertising and free "organic" listings. A closer look at that, plus how "super conversion trackers" and "brand idiots" are likely to keep pressure on keyword prices.

As a reminder, the major search engines give you two main types of listings when you do a search. There are the "organic" or "free" or "natural" listings that they gather from crawling the web. They don't charge for these listings (though Yahoo's paid inclusion program kind of clouds the water over there). These listings are like the editorial content you get at newspapers.

Search engines also carry paid ads. Pay, and you can get listed for terms you want without hoping that it just happens naturally.

Jakob says:

I worry that search engines are sucking out too much of the Web's value, acting as leeches on companies that create the very source materials the search engines index.

That will resonate with many who have long voiced similar concerns that search engines are making tons of money by gathering "content" from sites from across the web to make their listings.

If suddenly every site on the web were to block Google from indexing them, Google would have a crisis in short order. Its main "content" would have gone away, and the ads alone aren't going to keep attracting searchers.

Web site owners have not done that, however. That's because by and large, they've found that search engines drive more traffic to them than they cost in terms of bandwidth of being indexed.

WebmasterWorld has become a classic case study of this. Google and other search engines were banned in November along with "rogue" spiders, because somewhat similar to Jakob's "leech" metaphor, they were seen to have been sucking down more bandwidth than it was worth supporting.

WebmasterWorld founder Brett Tabke was often quoted saying he had the best sleep in months after blocking the spiders. His sleep may have improved, but what to do about the major spiders didn't go away. By the end of December, Brett had done a 180 degree turn and let the major spiders back in.

Until now, WebmasterWorld's been about the only major site I can think of that has tried to block spiders. Craigslist was rumored to have done so, but that wasn't true.

I do believe concerns over spidering are growing, especially as we have more spidering from both the major search engines and from rogues that are out there. Back in October, The lie of distribution--search engines return very little value to news/blog sites yet hog bandwidth and increase server loads from Tom Foremski was an example of this.

As I commented on his blog, it's fair to say that despite grumbles, that the vast majority of site owners do not consider search engines leeches. If they did, they would deleech themselves by blocking spiders. It's not hard to do. A simple change to the robots.txt file will block all the major search spiders. But no on does this, because they want the traffic. Even Jakob's own file isn't blocking Google and gang.

But back to Jakob's point, it turns out he really isn't talking about the "source material" being leeched but instead about the high cost of advertising. Again to his opening statement, with the key part in bold.

I worry that search engines are sucking out too much of the Web's value, acting as leeches on companies that create the very source materials the search engines index.

And the evidence of this?

Paid search confiscates too much of a website's value.

What? Paid search "confiscates" a site's value? Since when did search engines suddenly show up at a web site and demand the owner sign-up for advertising? We've long had rumors that a site that doesn't advertise might find themselves banned with various major search engines. We've even had reports of "monetization targeting" where site owners have found that doing an ad or paid inclusion buy might clear up a spam banning problem. But by and large, there are plenty of web sites that spend nil with search engines on advertising and get plenty of traffic.

In fact, the exhausting, annoying, tiring, boring, you name it regular updates to Google generate plenty of forum fodder that show people aren't spending and getting traffic from search engines. If they weren't, they wouldn't be freaking out any time Google undergoes a major algorithm change that sends rankings dancing and for some, traffic plunging. They wouldn't worry, because they'd have had both a balance of paid and natural search listings that helped them ride out the rough times if there was an issue on the natural side.

Instead, the October 2005 "Jagger" update showed plenty of site owners are still dependent on getting traffic from search engines for free. The Nov. 2003 Google Florida update should have taught many not to be free listing dependent, but clearly they remain this way. And the lessons not to be dependent were in place even before this.

So overall, the issue doesn't involve free listings. Jakob's really concerned about the rising cost in search advertising. Over time, as he's worked with client sites, they've been able to pay more by pushing up conversion rates. But at some point, others catch up and the margins of what his clients can pay is reached. He says:

If your search bid stays the same, your ad will sink off the page as more and more competing sites improve their design enough to afford higher bids. Our site therefore has no choice but to increase its own bid to $7.99 per click if it wants to stay in business.

This simply isn't true unless Jakob's clients are making the mistake of depending solely upon paid search ads to gain customers. If that's the case, yep, you should be looking to diversify. More on this in a moment.

Jakob also says (and the bolding is his):

This is great news for search engines: they can double their income by doing nothing. Just sit and wait for all other websites to improve -- then skim off the increased earnings.

In other words, the search engines get to make more by doing nothing because the advertisers are learning they can afford to pay more. And they sound pretty evil. But rewrite it this way:

This is great news for the Super Bowl: the cost of buying a commercial keeps going up even though they do nothing. Just wait for advertisers to be willing to pay more -- then skim off the increased earnings.

Honestly, perspective like the above is very much in order. Consider:

• Search advertising has long been undervalued. People still pay less than a dollar for some paid search ads and they obtain clients that will be with them for life. But few advertisers are calculating the lifetime value of search. Jakob doesn't appear to be consider this. The examples he gives are to the purchases made directly from a click on an ad. Do his B2B customers come back to the site directly the next time and buy? If so, the only reason they did so was because they found the site through search in the first place. If you don't factor that lifetime value, then you fail to understand how much you really can afford to pay.  
• Advertisers are getting smarter. Those who better measure conversion know they can pay more and they are. The search engines are to blame for this? They're simply seeing that their undervalued advertising medium is finally growing to what it really is worth. The real person to be upset with is that other advertiser. And the solution is to get smarter.  
• It's an open marketplace. Is Apple is a leech on consumers for overcharging for MP3 players that you can buy from others that work as well if not better but lack the Apple logo? The search engines aren't forcing people to buy ads. If advertisers can't afford to continue paying high prices, they won't. And when they don't, the prices will fall. The exceptions are if the search engine conspire in some way to force purchases (say they really do link buying ads to getting other types of listings) or when they set artificially high minimum bids (Google tried doing this but had to drop many because people weren't willing to pay).

So rather than "despite search engines, websites can make money," as Jakob says, the reality remains that because of search engines, plenty of web sites are making money without spending a dime, pence, euro, yen or whatever on search advertising.

I completely agree that anyone running a web site should heed Jakob's "search engine liberation" advice of alternative ways to promote a web site, such as considering RSS, email newsletters and so on. But this isn't suddenly new advice. Any long-time internet marketer would tell you not to depend just on search engines. Thinking "beyond search engines" has been the core of my basic tips since I put them up back in 1997:

Search engines are a primary way people look for web sites, but they are not the only way. People also find sites through word-of-mouth, traditional advertising, the traditional media, newsgroup postings, web directories and links from other sites. Many times, these alternative forms are far more effective draws than are search engines. The audience you want may be visiting a site that you can partner with or reading a magazine that you've never informed of your site. Do the simple things to best make your site relevant to search engines, then concentrate on the other areas.

It's all a matter of balance. Don't obsess over search engine listings, but don't ignore them, either. Do a variety of online marketing activities -- and do a variety of offline ones, as well. Search -- both paid and free -- is a component of any campaign. But it isn't something you should depend on, any more than you should depend on all television advertising, all print ads, all RSS ads or a strategy of no advertising at all. If you are not diversified, you'll have a weakness that might hit when you least expect it.

To conclude, no one should put all their eggs into any basket, search or otherwise. It's absolutely true that search engines are not the end all be all and that sites can thrive and survive without them. But many sites also can thrive and survive better by incorporating them into a diversified publicity campaign.

Search engines definitely can do more to help those with support on the organic side of things, which is especially needed since webmasters do indeed provide the content that the search engines depend on. The good news is that last year, we saw more changes and developments to give webmasters new tools than ever before.

Finally, ad prices will likely continue to rise, and different advertisers will react in various ways. John Battelle recently pointed at a blog suggesting that FTD might be nearing all it can afford to spend. But just today, we reported on a survey showing four out of five advertisers saying they can still afford to pay more, though the question of whether a plateau is being reached is raised. Then the latest Fathom report on keyword prices saw a continuing "downward spiral," as MediaPost put it. I haven't looked closely at the latest numbers, but the sample is so small (500 terms) that I'm generally wary on depending on it as a foolproof predictor.

From my part, I see two main issues with keyword prices going forward: Super Conversion Trackers & Brand Idiots.

Super Conversion Trackers are those who will indeed track a lifetime value of someone who comes to them from search. They'll understand that the initial purchase may lead to more and more purchases over time and feel comfortable paying multiples above competitors to gain a lead. That will push some out of the bidding. See Most Conversions Happen Offline; You Need To Measure These! for some further thoughts on this.

Brand Idiots are what some marketers think derisively of others who jump into bidding without linking it to a direct ROI target. They can screw up bidding on what seems to be "logical" or "fair" amount that most in the marketplace may assume. But brand idiots are part of that marketplace, and you can expect to see more of them.

Automakers Buy Up 80% Of Ad Space On Car Sites For 2006 from AdAge is a good example of this. It explains how automakers are going more and more online to extend their brands. Edmunds, a car research site, expects to take those brand dollars and buy more search as well as display ads to fuel that desire. That's big brand money that's going to be fueling those buys and putting pressure on others trying to compete.

Big Guys Crowd Out Little Guys in SEM Arena; Some Branding Focused Advertisers Willing to Spend "Whatever" It Takes and C'mon In Brand Owners, The Search Water's Fine has more on these type of moves.

Stuck in a bidding war? How To Get Out Of Bid Wars A Winner? over at our Search Engine Watch Forums may have some helpful advice if you're already tracking and improving conversions as much as possible and getting some brand idiot money is not an option.

Want to comment or discuss? Visit our SEW Forums thread, Search Engine Leeches, Dependency & Losing Perspective.

Posted by Danny Sullivan at 1:27 PM | Permalink

Fathom Online: Keyword Prices Drop in December

MediaPost has news about the just released Fathom Keyword Price Index (KPI) report for December in the article: Keyword Prices Continue Downward Spiral.

Led by drops in the cost of terms related to mortgages and consumer services, keyword prices fell to an average of $1.43 last month--representing a 16 percent drop from the $1.70 average paid by search marketers in December 2004, according to the latest keyword price index from search engine marketing agency Fathom Online.

The article includes charts with year-over-year and month-over-month numbers for eight categories. The full text of Fathom's December report is also available here.

Posted by Gary Price at 12:12 PM | Permalink

November 7, 2005

Oct. 2005 Keyword Prices Stay Flat From Last Month, Drop From Last Year

Fathom Online has released figures from its latest Keyword Price Index showing that prices overall stayed about the same as last month, rising $1.44 to $1.45. The automotive category dropped 14 percent, however, while the finance category rose 15 percent. Compared to the same month last year, however, prices dropped about six percent. More details in this press release from Fathom and this MediaPost story.

Posted by Danny Sullivan at 11:36 AM | Permalink

July 7, 2005

Search Ad Prices Up 3% In June 2005

The average price for search ads rose slightly last month, according to the latest Keyword Price Index from Fathom Online. The average price paid in June grew to $1.72, up 3 percent from $1.67 in May.

The wireless category had the greatest gain, rising to an average of $1.19 or up 19 percent from last month. No other category saw a double-digit percent rise. Only the broadband category saw a drop, dipping a slight 2 percent down to $1.97.

The chart below gives a per category breakdown, sorted by most expensive category:

Category

June 2005

Change From Last Month

Percent Change

Mortgage

$4.66

$0.14

3%

Broadband

$1.97

-$0.05

-2%

Investing

$1.89

$0.08

5%

Automotive

$1.53

$0.03

2%

Wireless

$1.19

$0.19

19%

Consumer Services

$1.12

$0.03

3%

Travel/Hospitality

$0.88

$0.01

1%

Consumer Retail

$0.53

$0.04

9%

Average

$1.72

$0.06

3%

Below are figures sorted by percent change:

Category

June 2005

Change From Last Month

Percent Change

Wireless

$1.19

$0.19

19%

Consumer Retail

$0.53

$0.04

9%

Investing

$1.89

$0.08

5%

Mortgage

$4.66

$0.14

3%

Consumer Services

$1.12

$0.03

3%

Automotive

$1.53

$0.03

2%

Travel/Hospitality

$0.88

$0.01

1%

Broadband

$1.97

-$0.05

-2%

Average

$1.72

$0.06

3%

More information on the latest figures and past stats should be posted by Fathom later today -- see the company's home page. If not, review the Fathom press release page. For Search Engine Watch members, the members' version of this story has a graphical look at prices over time.

Posted by Danny Sullivan at 9:20 AM | Permalink

June 7, 2005

Search Ad Prices Down 15% In May 2005

The average price for search ads dropped sharply last month, according to the latest Keyword Price Index from Fathom Online. The average price paid in May dipped to $1.66, down 15 percent from $1.95 in April.

The mortgage category is most responsible for the plunge, Fathom says. If it weren't included, then the index drop would have been only 3.3 percent. That category in the past has also seemed most responsible for some of the rises.

Given this, the number of categories in the index "basket" may need to rise, to provide a better overall picture of the search ad price market as a whole. Alternatively, it might make sense to have one index for categories that often see significant changes versus those that fluctuate less often. At the very least, it underscores the fact that the "average" may bear no relation to what's happening within a specific industry. It's something Fathom says itself, in its latest release:

We should also stress that the pricing fluctuations measured by the KPI in May should be viewed only in the context of the eight categories reported and not as a proxy for the entire search industry.

All categories except automotive saw some degree of drop last month. After mortgages, the investing category has the biggest percent drop and change in amount paid. Other categories saw tiny changes. The chart below gives a per category breakdown:

Category

May 2005

Change From Last Month

Percent Change

Mortgage

$4.52

-$1.97

-30%

Broadband

$2.02

-$0.07

-3%

Investing

$1.81

-$0.22

-11%

Automotive

$1.50

$0.10

7%

Consumer Services

$1.09

-$0.04

-3%

Wireless

$1.00

-$0.01

-1%

Travel/Hospitality

$0.87

-$0.05

-6%

Consumer Retail

$0.49

-$0.03

-6%

Average

$1.66

-$0.29

-15%

More information on the latest figures and past stats should be posted by Fathom later today, probably here. If not, review the Fathom press release page. For Search Engine Watch members, the members' version of this story has a graphical look at prices over time.

Posted by Danny Sullivan at 6:20 AM | Permalink

May 11, 2005

Search Ad Prices Up 11% In April 2005

The average price for search ads rose sharply for the second month in a row, according to the latest Keyword Price Index from Fathom Online. The average price paid in April rose to $1.95, up 11 percent from $1.75 in March. It's the only the second month-to-month double-digit rise since the index began in September.

The mortgage category saw the most significant rise, jumping 20 percent from last month to $6.49. That places it well above the amounts paid in other categories. Broadband follows at $2.09. The only categories to show drops were automotive and travel/hospitality, slight 1 percent declines with each. The chart below gives a per category breakdown:

Category

April 2005

Change From Last Month

Percent Change

Mortgage

$6.49

$1.10

20%

Broadband

$2.09

$0.24

13%

Investing

$2.03

$0.17

9%

Automotive

$1.40

-$0.02

-1%

Consumer Services

$1.13

$0.05

5%

Wireless

$1.01

$0.06

6%

Travel/Hospitality

$0.92

-$0.01

-1%

Consumer Retail

$0.52

$0.01

2%

Average

$1.95

$0.20

11%

More information on the latest figures and past stats can be found in this release from Fathom. For Search Engine Watch members, the members' version of this story has a graphical look at prices over time.

Posted by Danny Sullivan at 3:38 PM | Permalink

April 7, 2005

Price of Search Ads Increases 9% in March

John points us to this Media Post article and chart about the latest Fathom Online Keyword Index. According to Fathom, paid search listings increased 9% last month to an average of $1.75.

The average cost of keywords--which had fallen during the first two months of the year, after rising steadily from September through the holidays--now exceeds last December's $1.70 by about 3 percent. Matt McMahon, Fathom Online's executive vice president-corporate development, attributed the upswing in keyword pricing to seasonal shifts in ad spending.

Posted by Gary Price at 2:42 PM | Permalink

March 21, 2005

Search Ad Prices Rising -- Retailers Seek Options

Some Retailers Balk At Search Ads As Prices Soar from Dow Jones discusses how as search ad prices rise, some retailers are no longer finding they can keep up. Of course, using eBay as a prime example of this actually isn't convincing. As a "middleman," eBay's naturally going to find it hard to get the same return as a merchant who sells direct and wishes to bid against them for the same term.

With respect to my JupiterResearch colleague Niki Scevak cited in the story, the idea that rich media or banner ads are nearing the same ROI as paid search is simply not believable. It's not a fact I've not heard from any of the advertisers I've talked with nor written of widely anywhere. Honestly, I'm just left wondering if that fact wasn't sourced right or understood correctly for this story.

Anyway, the financial/investor types are all freaked that the prices mean that search engines will be in trouble if advertisers drop out. Hey, it's limited inventory. It's like saying that TV is in trouble because people want to pay more for the limited ads they have. They aren't. Higher prices means demand, not a lack of it.

Also note that at the end of the story that those prices are expected to rise, improving conversions is one way advertisers are expecting to stay in the market (another way is a turn back to organic/free/natural search). See also the past blog post Most Conversions Happen Offline; You Need To Measure These!, to understand how current ROI measurements may only scratch the surface of measuring true conversion.

Posted by Danny Sullivan at 1:11 PM | Permalink

March 2, 2005

Keyword Search Prices Drop Two Percent

A new Fathom report was released today and shows that keyword prices dropped two percent last month.

Despite the overall decrease, the mortgage-finance category again rose three percent from $4.93 to $5.10...The telecom-broadband sector prices also rose three percent from $1.67 to $1.72...Since January, the consumer retail and services categories dropped considerably by 12 percent and 19 percent respectively from January levels...Keyword prices in other verticals decreased by more modest amounts. Automotive keyword prices dropped four percent from $1.34 on average to $1.28; travel prices dropped by eight percent reflecting the post-holiday season...

More numbers and a chart are available here.

Posted by Gary Price at 11:03 AM | Permalink

February 25, 2005

Conversion Research Shows Search Costs Could Rise

Research Supports Aggressive SEM and SEO from Kevin Lee at ClickZ looks at two recent search and conversion behavior studies to summarize findings. Commonalities? Most searches are for generic terms, which in turn happen early in the buying cycle. Other findings? Nearly all (90 percent) of search conversions happen offline and half search before doing any online upchase. Conclusion? Costs will probably go up more, as marketers get better at measuring where and when conversions happen and learn they can afford to pay more.

Posted by Danny Sullivan at 11:45 AM | Permalink

February 11, 2005

eBay President Says Keyword Pricing "Bubble Like"

An article from Reuters: eBay: Key word pricing 'a little wild', includes a comment or two from eBay North America president Bill Cobb about keyword advertising.

"Pricing is a little wild right now. We have to focus on getting fair value," Cobb said at eBay's analyst meeting in San Jose, California.

Posted by Gary Price at 10:38 AM | Permalink

February 3, 2005

Average Keyword Prices Drop For First Time Since September

The Keyword Price Index from Fathom Online for January showed a 3 percent drop from last month, the first decline since the index began in September. The average keyword price dropped from $1.70 in in December to $1.64 in January. The chart below gives a per category breakdown:

Category

Jan. 2005

Change From Last Month

Percent Change

Mortgage

$4.93

$0.14

3%

Broadband

$1.67

$0.04

3%

Investing

$1.73

-$0.03

-2%

Automotive

$1.34

-$0.07

-5%

Consumer Services

$1.29

-$0.07

-6%

Consumer Retail

$0.52

-$0.06

-10%

Travel/Hospitality

$0.88

-$0.09

-10%

Wireless

$0.79

-$0.30

-28%

Average

$1.64

-$0.05

-3%

The mortgage and broadband categories were the only ones to rise. Mortgage is now the only category to consistently show month-to-month rises since the index began.

The wireless category saw a severe drop. After months of being around the $1.09 mark, it dropped to $0.79. Fathom speculates this might be to do a drop off in giving phones as gifts, now that the holiday shopping period has passed.

Below, a graphical look at the prices over time. Prices for the mortgage category are broken out from the others, so that you can better see trends:

Posted by Danny Sullivan at 9:19 AM | Permalink

January 24, 2005

Companies Swarm to Search Advertising

The Chicago Tribune article: Web words become a lucrative market, offers an overview of how search ads work, touches on click fraud, and includes a couple stories from search advertising customers in the Chicago area.

Posted by Gary Price at 2:06 PM | Permalink

January 6, 2005

Keyword Prices Rise Again, But Only Slightly

The Keyword Price Index from Fathom Online for December showed a 2 percent rise from last month, the smallest month-to-month change since the index began in September. The average keyword price rose from $1.66 in November to only $1.70 in December. The chart below gives a per category breakdown:

Category

Dec. 2004

Change From Last Month

Percent Change

Travel/Hospitality

$0.97

$0.07

8%

Consumer Services

$1.36

$0.09

7%

Automotive

$1.41

$0.06

4%

Investing

$1.76

$0.06

4%

Broadband

$1.63

$0.04

3%

Mortgage

$4.79

$0.05

1%

Wireless

$1.09

$0.00

0%

Consumer Retail

$0.58

-$0.02

-3%

Average

$1.70

$0.04

2%

The only category to see a drop was consumer retail, a decrease of 3 percent over last month. Previously, this category had seen double-digit month-to-month increases.

Fathom attributes the decrease -- which seems odd in the middle of a busy consumer shopping month -- to the shorter retail cycle for online merchants:

"The online market buying season ends earlier because of the shipping window," said Chris Churchill, Fathom's CEO, in a release with the stats. "eTailors begin tapering off the keyword buying starting December 10th because they are facing fulfillment and shipping problems?a lot of business in too short a time. Similarly, online starts a month earlier (before Thanksgiving) because consumers are taking into account the shipping time. So it all makes sense and is actually a longer buying season for eTailors then for brick and mortar."

In other changes, the automotive and broadband categories saw their first month-to-month rises since the index began, while the mortgage and consumer services categories had their third consecutive month of declines.

FYI, I calculate a 2.6 percent rise from last month, which would round to 3 percent. Fathom cites 2 percent, so I'm going with that. The difference is likely due to rounding of the prices they report publicly. Working from rounded figures can produce such small discrepancies.

Past coverage of Fathom KPI releases can be found below:

• Nov. 2004: Fathom KPI Finds Prices For Consumer-Targeted Keywords Rise Again
• Oct. 2004: Keyword Prices Rise, But Only In Some Categories
• Sep. 2004: Fathom Keyword Price Index Provides Bid Benchmark

Search Engine Watch members also have access to the Stats and Search Ads: Prices categories of Search Topics that recap stories on this topic over the years.

Posted by Danny Sullivan at 9:58 AM | Permalink

December 20, 2004

Keyword Celebrex More than Quadruples in Price

In just a few days the keyword Celebrex has gone from a $.95 cent term on Overture to over $4.00, according to this article from Bambi Francisco at Marketwatch.com.

Francisco adds, "...on Friday, there were no personal-injury attorneys using this keyword to advertise. On Monday, the top five advertisements came from attorneys seeking to represent potential Celebrex victims."

Posted by Gary Price at 1:24 PM | Permalink

December 13, 2004

Search Term Prices Skyrocket

Kris Oser at AdAge.com (free, sub req.) looks at the rising cost of keywords in: Search Engine Ad Term Prices Skyrocket.

Because the method has proven to be such an effective marketing tool and also because record numbers of consumers are shopping online this holiday season, the price for premium search words and phrases has risen as much as 80% since last year, according to Rob Wilk, director-search engine marketing at Avenue A/Razorfish Search.

Search-related media buying agencies say that online marketers are developing the habit of increasing their search marketing budgets by up to 30% for the gift-giving season.

Posted by Gary Price at 10:43 AM | Permalink

December 6, 2004

Fathom KPI Finds Prices For Consumer-Targeted Keywords Rise Again

Fathom Online's Keyword Price Index for November showed a 7 percent rise from last month, with the average price per keyword jumping from $1.55 to $1.66. The chart below gives a per category breakdown, from figures Fathom Online provided to Search Engine Watch:

Category

Nov. 2004

Change From Last Month

Percent Change

Consumer Services

$1.27

$0.31

32%

Consumer Retail

$0.60

$0.12

25%

Mortgage

$4.74

$0.43

10%

Investing

$1.70

$0.10

6%

Travel/Hospitality

$0.90

$0.05

6%

Wireless

$1.09

$0.03

3%

Automotive

$1.35

-$0.04

-3%

Broadband

$1.59

-$0.19

-11%

Average

$1.66

$0.10

7%

Once again, keywords in the consumer services category showed the strongest rise, with consumer retail keywords also up. Mortgage and travel terms also had rises, though at far less a rate than the rise from September to October 2004.

The wireless and investing categories, which had seen a drop between September and October, now show a gain. Only the automotive and broadband categories have now shown two month's worth of decline, since the KPI began in September 2004.

MediaPost has some comments from Fathom about the reasons behind the increases here, As Online Retailers See Black, Search Marketers See A Tinge Of Red, in particular talking about some daily average increases following the traditional busy post-Thanksgiving shopping period.

New figures from DoubleClick also provide a look at the Thanksgiving shopping period and search marketing activity. See our earlier entry, DoubleClick Says Black Friday Was Good For Search Marketing.

Posted by Danny Sullivan at 10:41 AM | Permalink

November 8, 2004

Keyword Prices Rise, But Only In Some Categories

Fathom Online's Keyword Price Index showed a 14 percent rise from September, with the average price per keyword jumping from $1.37 to $1.55. The chart below gives a per category breakdown.

Category Oct. 2004 Change From Last Month Percent Change Consumer Services $0.96 $0.42 78% Consumer Retail $0.48 $0.16 50% Mortgage $4.31 $1.14 36% Travel/Hospitality $0.85 $0.21 33% Wireless $1.06 -$0.03 -3% Broadband $1.78 -$0.11 -6% Investing $1.60 -$0.16 -9% Automotive $1.39 -$0.15 -10% Average $1.55 $0.19 14%

Keywords in the consumer services category showed the strongest rise, while a number of categories actually showed decreases.

In terms of actual cost (as opposed to percentage change), the mortgage category had the biggest rise, a $1.14 hike. Fathom attributes that to competition to gain new accounts when interest rates on 30 year mortgages dipped in October, in the US.

Posted by Danny Sullivan at 9:11 AM | Permalink | Comments (0)

October 12, 2004

Fathom Keyword Price Index Provides Bid Benchmark

Search marketing firm Fathom Online has assembled a Keyword Price Index to show average bid prices for various industries.

The index looks at the prices for the top five spots for the 500 most queried terms for an industry, as determined by Fathom. Prices include those on major and lesser-known search engines.

For September 2004, automotive had the highest average weighted price of $1.54 per click. Wireless telecommunications came lowest at $1.09. More details here: New Tracking Data Reveals Marked Disparities In Paid Search Costs, Yield.

Posted by Danny Sullivan at 10:54 AM | Permalink | Comments (0)

October 5, 2004

Search Ad Pricing and Current Events

Bambi Francisco takes a look at the relationship between current events (for example, the recent Vioxx recall) can drive keyword advertising in: News expands paid-search terms.

But is sponsoring keywords related to news event an effective source of marketing?

Apparently it is for at least one law firm that paid up for the term Vioxx.

"On Friday, we received about 13,500 hits on our Web site," said Richard Patterson, an attorney at Owen Patterson & Owen, a nearly 30-year-old law firm specializing in personal injury cases. Roughly 2,500 visitors came from the search campaign Friday, 25 times the total traffic (search-engine leads as well as visitors that go directly to the site) on a typical day, Patterson said.

Posted by Gary Price at 9:06 AM | Permalink | Comments (0)

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