Google CPC Inflation: How To Combat Rising Costs

At an event in London last month, we had discussions with a number of brands and advertisers about the state of the PPC market. One of the topics of conversation that kept cropping up was the steady rise in CPC figures over the last 12 months. Conversely, in Google’s Q1 2015 earnings report they revealed that the cost-per-click on Google websites had actually dropped by 13%.

Facts are facts, but brands know their CPCs, and unfortunately the Google earnings report data don’t tell us much in terms of the state of Google paid search in the UK. The Google earnings data is global, and covers all sectors, so it was interesting when Google revealed that it is actually YouTube ads are the main cause of the 13% drop.

As such, it may well be that the UK retail sector – specifically Google paid search ads – could actually be seeing an increase in CPCs.

In the retail space especially there are likely to be seasonal increases in CPC levels as more players enter the market and everyone is bidding for the same ad space. Let’s look at a few factors that may be impacting the UK CPC values.

WHAT IS CAUSING THE INCREASE?

This isn’t a question with a straightforward answer, as the variables differ from market to market and sector to sector. That said, there are a few global trends that are constant.

1. The annual number of Google searches continues to increase – more people are searching on Google more often, on different devices.

Annual number of Google searches - Global

2. Google impression growth has stalled – Searchengineland.com reported that as Google impression growth stalled, it ultimately fell into decline, and there was a concurrent rise in average Google first page minimum bids.

Google Average First Page Minimum Bids Over Time

3. More ad space, but Google showing less ads – is Google showing less ads? There are different SERP layouts for different queries, but we’ve noticed a change. Despite there being much more space for ads – and especially Google Shopping ads – there are often only five or six text ad slots, like this SERP for example.

Google shows 5 ad slots on this SERP in the retail sector

3. More competition – whilst we’d love to lay all the blame at Google’s door for inflated CPCs, some of the problem stems from our own competitive nature. Simply put, there are more brands bidding on more terms, and more companies entering the market all the time. If you’re competitors bid more, you will have to bid more, and thus the bidding scale spirals upwards.

WHAT CAN I DO TO COMBAT RISING CPCs IN GOOGLE ADWORDS?

Let’s look at a few solutions that could help mitigate against rising CPCs in your sector.

FOCUS ON ACCOUNT QUALITY – Check, check again and triple check the overall performance of your account and make sure it is ticking over like an Aston Martin engine. In addition to a good Quality Score, better CTRs across your account will help bring down the cost for each click, and ensuring you get the same traffic for a lower cost.

KEEP AN EYE ON YOUR COMPETITORS – As mentioned above, one of the reasons for inflated CPCs is more competition and increased bids. One way to keep on eye on your competitors is to view the Auction Insights report in Adwords. This will tell you their impression share compared to you, and how often their appear above you, for both search and shopping campaigns.

Google Auction Insights - Competitor Data - Adwords

Adjusting your bids, landing page quality and relevancy will give you a much better chance of paying a lower CPC to appear above them in the SERPs.

LANDING PAGE QUALITY – We recently completed a huge keyword build out for a retail client with the specific focus of ensuring the most accurate relevancy for each keyword. With over 11,000 products, this was no easy task, but they are now reaping the rewards.

Matching the keyword to the ad text, and the ad text to the most relevant landing page will help reduce the amount you pay for each click. Remember, Google’s Page Speed – especially for mobile – is now page specific, so run some speed tests on your ‘heaviest’ pages, ensuring your pages load faster than your competitors. This should help improve your Quality Score and help you appear high up the SERPs for no extra cost.

RELEVANCE, RELEVANCE, RELEVANCE – Regardless of the size and scale of your Adwords campaigns, it is vital to get a good structure in place to ensure that you can efficiently control budgets, as well as scaling up and down. This will then allow you to do the basics well.

  • Don’t over-rely on broad keyword matching – be more specific with exact and phrase match.
  • Build out your negative keyword list – reduce the amount of non-transactional phrases you are bidding, particularly brand phrases where SEO should mop up the traffic.
  • Match ad text with keyword phrases – there are so many times where we see brands paying inflated CPCs simply because their ad text doesn’t match the keyword phrase. This leads to reduced Quality Score, meaning you’ll pay more for a higher ad position. If you go down the route of using dynamic keyword insertion, check, check and check again that the relevance is as accurate as it can be.

 

There you have it.  Hopefully the suggestions above will help to drive more traffic at the same cost, improve your overall Quality Score, and help you mitigate against the Google CPC inflation.

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