Paid search: more expensive and less effective?

by Gareth Jones, revolutionmagazine.com 12-Jun-09, 14:43

LONDON - The cost of paid search has rocketed over the last year despite click-through rates declining dramatically, according to new research.

A study by the IPA's Search Group shows that the average CPC shot up from 6p to 29p on brand terms between January 2008 and March 2009, while click-through rates declined from around 40 per cent to 20 per cent during the same period.

The data submitted by 12 agencies on behalf of 47 brands raises questions over the efficiency of paid search on brand terms at a time when marketers are looking to maximise ROI.

Google introduced a number of fundamental changes to its AdWords platform during the period in question, most significantly relaxing its PPC policy to allow brands to bid on keywords trademarked by rivals.

The search giant claims it introduced the changes to improve the consumer experience, but it faces ongoing accusations of knowingly driving up the cost of search to boost revenue during the recession.

"The declining click-through rate challenges the notion that Google's trademark change was in order to benefit the users," says Arjo Ghosh, chair of the IPA Search Council and chief executive of iCrossing. "To understand the full picture it would be good to see an analysis of user behaviour in paid and natural search."

Comments

Paul Doleman - 12/06/2009

Hold on Gareth, that "Paid search more expensive and less effective" is VERY MISLEADING. The IPA noticed increased click prices \(CPCs) and reduced click through rates \(CTRs) on brand terms, and NOT across the whole of a paid search campaign. In fact I could show you data from the vast majority of iCrossing PPC campaigns that show a reduced campaign average CPCs and increased CTRs. We need the full picture of attribution and information on consumer behaviour accross the full search engine results \(paid, natural, personal and local) rather than jumping to sweeping conclusions. Paul Doleman, iCrossing CTO

Gareth Jones - 12/06/2009

Fair point Paul. I'll make sure that is flagged up in the article.

MERINDA PEPPARD - 19/06/2009

The IPA's figures are a worry for brands. If brand prices indeed increased from £0.06 to £0.29 there could be a dramatic impact on client's search efforts – a forced redistribution of budgets to brand terms. Such a lift would also suggest both increased competition and a large shift in quality score driven discounts for brand owners. We decided to look at Efficient Frontier's advertisers to see if we could see the same dramatic trends. See our blog for the results. http://blog.efrontier.com /