Google Admit Cost Per Click Increase

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June 10th, 2008 by Click Consult

The volume and growth at Google has been under close scrutiny this and last financial quarter. The main focus has related to the earnings, value and share price of Google and the affects on the advertiser and pay per click marketer have been overlooked.

Google announced only a 1.8% increase in traffic though the pay per click links managed by adwords, but announced a massive 30% increase in profits!

Google do have other sources of revenue other than the Adwords and Adsence programmes, but these are the major revenue drivers. How, less than 2% growth in traffic can create 30% increase in profits?

The fact of the matter is cost per click (CPC) is increasing. And this must be across the board to generate such massive revenue and profits.

Some time ago the number of Adwords pay per click links returned per search results page was reduced. This was done under pretence that less results inspires more trust and increased use of the sponsored links. A noble cause indeed, but the after effects are being felt now. As those pay per click advertisers, previously clinging to the bottom of the first page are bumped in the second page abyss, try to fight back and bid higher.

There were a good number pay per click advertisers on adwords in their comfort zone floating around positions 4 to 7. Generating enough clicks and conversions for the most minimal bids and budget. Now the carpet is pulled from under them and to get any traffic they need to get back in to the top 5 to ensure their pay per click ad gets on the first page of the search engine results. This has created a more competitive auction for almost every commercial search terms.

Increasing bids is not the only way to get up the listings. While it is much easier to defend a position than gain it, both can be achieve by using a well structured and managed campaign. While Google still want its money, they know the have achieved all they have by returning the most relevant results possible. By targeting keywords and ads effectively and producing the most relevant ad possible Google would be happy for the ad to appear higher. Relevancy is the only way to beat the cost per click increase.

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