Google Cost Per Clicks Keep Rising

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May 16th, 2008 by Click Consult

Google announced their profit for the first quarter have increased by 30% to $5.19Bn. A huge amount in anyone's eyes but is it well deserved?

This boost in profits has been assisted by the innovations in the Google Apps systems and no doubt helped by the push of sponsored links on Google properties such as Maps and You Tube. The worry is that the growth in traffic on the sponsored links has slowed and is to less than 2%, a figure dwarfed by the growth in revenue and profits. How can this come about?

Google have openly said that they are serving less pay per click (PPC) ads per page in a bid to increase relevance, but this would certainly appear to have had a knock on effect to the cost per click (CPC).

Google Adwords serves between 7 and 11 pay per click (PPC) ads per search engine results page (SERP). If this was reduced to 7 for every page, those PPC advertisers bumped off the bottom will need to increase their bids to get back on the first page. Add that to all those other advertisers that have been nudged down the list and competition is growing. Cost per click (CPC) bids will have to increase to defend those top spots and before you know it so does the advertising bill! Hey Presto! Google can dip the traffic yet boost the value of sales to appease the very nervous share holders.

The most shrewd advertisers can avoid this bid hike as the maximum cost per click (CPC) is not the only attribute that affects the positions. By making the ads as relevant as possible not only improves the quality of your traffic but will also reduce your cost per click.

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