Advertisers need to be weary about rising CPCs headed into the big retail holiday season. They should not based their budget on rates and costs from earlier in the year as their sole source. Look to prior year metrics for the same time period as a better base line. However, it appears that even those seasonally adjusted numbers are rising sharply.
As a result, I hypothesize that retailers may branch out into long tail a bit more than normal, as well as dabble in newer areas such as display markets, video and mobile.
This may cause a shortage in inventory across all channels, further driving up prices for non-retailers in related industries, especially when you take broad match in to account.
2 responses to “CPCs Increasing Sharply During Holiday Retail Season”
Hey Dan,
Thanks for the link to Mediapost. Were you able to find any other studies to support rising CPC’s. A couple of our clients are experiencing similar trends sometimes higher than 23%.
Thanks,
DEP
I’ll dig around and let you know if I come across any other specific studies. However, I think we can all agree that seasonality plays a big role in CPCs; and they go up faster than they go down (in my experience). In my industry, higher education, CPCs tend to be highest around traditional enrollment periods (beginning of the year and late summer). During these times there are more advertisers than usual, pushing up the prices. Even though there may be a higher volume of search queries, the high quality queries tend to be out numbered by demand to display ads. This creates a bidding arms race. I imagine the same is true for retailers starting in November through the new year. And for other businesses, such as travel, CPCs would be highest leading up to peak travel times. What I have also seen is that while CPCs do come down from these high levels, we see sustained growth in bids year/year on a consistent and all-too-familiar basis.
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