Google CPC drop comes to a halt in January 2013


Google CPC drop has finally come to a halt in January with the rising CPCs as well as increasing click share on tablets. There is a drop of Google CPCs in retail sector as the holiday season has come to an end, while the financial sector is witnessing a small increase. This is because advertisers are spending on tax saving products and services.

CPC trends in the market

Google CPCs rose during this month compared to the decline it has been seeing in the last few quarters. Bing’s growth in CPCs was relatively flat year-on-year. The significant Google CPC drop was subject to much speculation within the industry. Google had stated that this decline had been due to new ad types, foreign exchange rates as well as increase in cheaper mobile traffic. The recent reversal in trends can be attributed to rise in click share and CPCs on tablet devices. The increase is also due to the rise in click share and CPCs obtained by Product Listing Ads of retail sector.

Influence of device types on CPC trends

Until June of 2012, CPC trends, especially that of retail sector, had been similar in all device types. However, CPCs of smartphones are diverging from that of tablets and PCs. This has been visible in the fourth quarter of 2012. The CPCs for smartphones fell by 11 percent year-on-year, while those of PCs and tablets rose.

Search click share also saw a change in trend. Previously, click share of tablets and smartphones were both significantly on the rise. However, by Q3, the rise of the click share of smartphones had come to a halt while that of tablets is continuously rising.

This may be attributed to the fact that tablets are relatively new compared to smartphones and have more potential to scale. Moreover, overall efficiency and conversion rates of smartphone traffic are not very impressive as compared to desktops and tablets due to which competitiveness in terms of ROI will be less for the former.

However, the fall in smartphones CPC is unlikely to have any huge impact on the overall CPC trends. This is because the advertising click share in smarphones has reached a steady level and the click share and CPCs of tablets will soon overtake this figure. The CPCs of smartphones have the possibility of rising with advances in mobile advertising technology which will increase conversion rates. Another possibility is for a larger segment of users shifting to tablets which might affect the current conversion rates.

With Google CPCs on the rise, marketers have to focus on this trend to optimize ROI. Device-specific targeting will have to be adopted for this purpose as well.







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