Search advertisers will need to learn how to compensate for rising costs per click as Google gains profits from the migration to AdWords Enhanced Campaigns. CPCs on the search engine rose more than 6% during the last three months alone.
The findings, per Adobe Systems, come after analyzing Google ad campaigns from nearly 100 U.S. advertisers. They spent in aggregate more than $100 million from April through June. The deadline for migration to the new AdWords platform kicks in July 22.
The shift will require automation and data to analyze campaigns and compensate for rising bid costs. Sid Shah, Adobe director of business analytics, attributes the decline to mobile traffic and the uptick to Enhanced Campaigns. "For the first time in seven quarters, we've seen year-over-year CPCs rise," he said. "In the next two quarters, you will see an increase in CPCs between 5% and 10%."
Since March, CPCs rose 6% -- but typically the industry experiences a decline during that month because of seasonal shifts. Historically, tablets producing a higher ROI, compared with desktops, changes with Enhanced Campaigns, which forces similar results on both.
Higher CPCs means more profit for Google and less for advertisers. As the market becomes more complex, search marketers will need to implement more sophisticated campaign strategies. Historically to control costs, marketers had to build three separate campaigns to separately target desktop, tablets and smartphones with the identical keywords.
Today, marketers must create one campaign and bid across all, but mobile Enhanced Campaign have a mobile bid adjustment feature to specify a percentage less or more to bid when running on mobile devices. It's Google's attempt to simply changes for marketers.
Advertisers have already begun to spend more on campaigns this year -- about 10% to 15%. With the increase in CPCs, Shah believes search marketers will spend another 15% to 20%, and site optimization on tablets also will become more important.
[Update: "There have been many speculative reports, but it's far too early for any of them to be reliable. Advertisers will choose their bids and adjust their spend based on the value they see in their campaigns." a Google spokesperson.]