It wasn’t until a client flagged their concern at results for q1 of 2018 that we noticed, the steady, and gradual increases of CPC’s (Cost-Per-Click) in the account. What was even more alarming is that we are seeing it across a multitude of industries and verticals that we operate in for our clients.
Why are we seeing this happen? There are various factors and reasons that CPC’s are on the rise, and have been steadily rising.
1. More competition – The more competitive the market, the more demand to advertise, the higher an advertiser is willing to pay.
2. Real Estate – Google’s change back in 2017 to move to a mobile layout, and eliminate ads from the side removed a significant amount of paid ‘real estate’ – What has this done? This has created less spots, for more advertisers which talks back to my point above around the competitiveness.
3. Automated Bidding/AI/Machine Learning – Call it what you will, there is reason to believe that automated bidding options add to the rise of CPC’s. We’ve performed spot checks in accounts that we have adopted automated bidding in, and noticed that in some cases, the bids were set to 5 and 6 times over what we’d bid on if we adopted a manual bidding strategy.
(As you can see from above) – We looked at one account in particular that was flagged by a client, despite spend levels remaining similar and a significant increase in our conversion rate 4.09% (q1-2017) vs 4.99% (q1 -2018) – we saw a decrease on conversions for q1 2018 when compared with q1 2017, conversions were down by 23%, in that same time period, CPC’s rose by 39%. CPC rise is something that can often be overlooked when performing a post campaign analysis or when cross-comparing performance.
This wasn’t the only account we saw this kind of skew, in another listing portal we manage, (whilst spend levels remained consistent during the compared time periods) and conversion rate had improved by 15% we saw an increase in CPC’s by over 32% whilst at the same time, conversions dipped by just over 10%
So while the search engines claim that their new technologies, UI/UX updates and products are all designed to help advertisers, don’t let it fool you! – There is an underlying aim to ensure that they’re creating a more competitive space, which is causing CPC’s to continue to rise, which makes them more money!