‘Google’s Enhanced Campaigns increasing online campaign costs’

The cost of paid-for search advertising rose steeply in the last three months with the average cost-per click (CPC) increasing six per cent during the period, primarily due to the introduction of Google’s Enhanced Campaigns, according to Adobe.

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An Adobe research study, conducted between March and May this year, observes a three per cent increase in the cost of tablet CPCs, plus a one per cent increase in CPCs on smartphones.

Adobe’s also notes that although CPCs typically rise during this period – retailers in particular boost spend in the hope of boosting footfall in the summer months – the increase observed in the last three months is sharper than usual. See chart below.

Paid-for advertising costs post the introduction of Google's Enhanced Campaigns
An increase in paid-for search costs of over six per cent is steeper than the traditional seasonal increase, according to Adobe.

This indicates that Google’s Enhanced Campaigns introduction is succeeding in helping to increase the search giant’s average CPC, reversing a two year decline – a goal identified by Google CEO Larry Page in its first financial filing of 2013.

Sid Shah, director of business analytics for Adobe’s Digital Marketing Business, says: “Enhanced Cam­paign migra­tion is one con­tribut­ing fac­tor to over­all CPC inflation. These per­cent­ages will likely rise as adver­tis­ers con­tinue migrat­ing to Enhanced Cam­paigns until the July 22 dead­line set by Google.

“For the past two years, Google CPCs fell on a year-­over-­year (YoY) basis due to the increase in mobile and tablet traf­fic where CPCs were lower.

“How­ever, for the first time in seven quar­ters [see chart below], the CPCs on Google are flat year-on-year and we antic­i­pate that CPCs will rise on a YoY basis again start­ing next quar­ter. We expect this trend to pos­i­tively impact Google’s ad revenue.”

Comparative CPC rates
Google’s introduction of Enhanced Campaigns is helping to reverse a two year decline in paid-for search advertising.

The research was based on CPC trends observed across nearly 100 major US adver­tis­ers, rep­re­sent­ing more than $100m in ad spend

Earlier this year Google announced its AdWords overhaul in what many termed as the most significant change to its paid search advertising service since its launch.

The changes to Google’s AdWords platform mean advertisers can now adjust their bids for ad impressions on smartphones, location and on time of day using a single interface.

For example, a restaurant targeting mobile users searching for ‘restaurants’ near its outlets can use bid adjustments to pay 50 per cent more for searches on smartphones because the clicks are deemed more valuable.

The business can also bid 25 per cent higher for people searching within a mile of their premises and 20 per cent lower for searches in the morning, as these searches are deemed less vaulable.

These bid adjustments can apply to all ads and all keywords in one single campaign interface whereas previously this would have required separate campaigns to target users in the different scenarios.

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