Increase in Brand CPC

July 22, 2015

Digital Marketing Andrew Belsky By Andrew Belsky

At ChannelAdvisor, top online retailers trust us to manage their paid search programs. One of the key components of our strategy involves constantly analyzing our clients’ performance from all angles (device, time, date, brand vs. non-brand, etc.) to make sure that we’re on top of all aspects of the program. One trend in particular has sparked some internal conversations here: the increase in brand cost per click (CPC) that we’re seeing across a few of our advertisers.

The following chart and table show performance by month over the last year for one such advertiser, looking at the top-achieving keyword (from a volume perspective) only through desktop searches.

YOY Brand Keyword Performance — Desktop

YOY Brand Keyword Performance — Desktop

CTR and CPC for Top Keyword Performance — Desktop

CTR and CPC for Top Keyword Performance — Desktop

As you can see from the data, this client has a very healthy click-through rate (CTR) that grew steadily in 2014. This year, the rate has not been quite as high, but is still bouncing around the 50% CTR level. In other words, the client is still getting a click for one out of every two impressions.

But what you’ll notice on the CPC side of things is a significant month-over-month increase in 2015. Clearly, CTR is falling off a bit, but the CTR in June 2015 is roughly the same as the CTR in February 2014, yet the CPC in June of 2015 is $0.28 compared to $0.12 in Feb 2014. Additionally, the keyword monitoring technology in our platform that helps us track changes in the search landscape over time confirmed that no other competitors for this ad appeared during any month of this analysis.

To obtain a better understanding of this trend, we decided to look at CPCs (at different CTR thresholds) during the first half of this year and last year in the following chart.

CPCs Based on CTR Thresholds in Q1-Q2 of 2014 and 2015

1/1/2014-6/30/2014, 1/1/2015-6/30/2015

CPCs Based on CTR Thresholds in Q1-Q2 of 2014 and 2015

So, at all levels of CTR analyzed, a sharp increase in CPC occurred over the previous year. Therefore, even if you maintain the same level of CTR, it’s going to cost you more this year than last year. Again, it’s unclear what is driving the cost up since the lack of competition on these keywords indicates an absence of other participants in the market.

Stay tuned — we’re going to drill into this trend across several ChannelAdvisor accounts and several blog posts, so keep checking back!

Are you seeing a similar trend? Let us know!

 

Blog post by Andrew Belsky, manager, strategic accounts, ChannelAdvisor


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