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Why Search CPCs Continue To Rise

The cost per click on search campaigns for retailers and brands continues to rise, forcing companies to spend more per click, but a recent report shows how marketers can lower costs. One of the strategies points to quickly scaling campaigns on mobile. A recent PM Digital report shows how focusing budgets on branding initiative, rather than ecommerce, can force positive change.

Interestingly, the industry sees prices rise across the board. The decline of organic traffic driven by changes to the search engine results page (SERP), which is becoming more focused on advertising, will continue to push up the price of a click. To replace sales lost to declines in natural search traffic, retailers are turning to the paid-search campaigns to maintain, or preferably, grow sales year-on-year (YOY). This means the lack of keywords provided (or more commonly known as keywords not provided) in organic search results continues to increase the price of paid search ads.

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The PM Digital Search Rewind: Third Quarter 2013 Search Report provides a look at paid and organic search performance as well as actionable insights on key industry trends. 

CPCs continue to rise for other reasons too, as search engines roll out new, better-performing ad units that are more expensive. The report points to non-brand search terms rising in cost, as clicks move up the page to product listing ads (PLAs). The report explains how click-through rates CTR for non-brand search fell 11% year-on-year (YOY), which impacts quality score and results in higher CPCs for non-brand clicks.

"The decline in CTR for non-brand search is offset by gains in CTR for trademark and PLAs resulting in an overall improvement of 7% for all paid search segments combined. Better CTRs mean higher overall spend as retailers do what's necessary to achieve their sales goals," according to the report.

The report explains that CTRs jumped to 33% in Q3 2013, compared with 20% in the prior quarter. A variety of factors led to improved click-through rates and click-volume growth in the quarter such as the ongoing innovation of search engine ad formats, the transition to enhanced campaigns and the urgency for brands to commit to a paid-search mobile strategy, and a back-to-basics strategy for mature paid-search programs moving the needle.

"Magnifying Glass" photo from Shutterstock.

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