• by Wendy Davis  @wendyndavis, January 9, 2006

Led by drops in the cost of terms related to mortgages and consumer services, keyword prices fell to an average of $1.43 last month--representing a 16 percent drop from the $1.70 average paid by search marketers in December 2004, according to the latest keyword price index from search engine marketing agency Fathom Online.

In the fourth quarter, average keyword prices fell almost 1 percent, from $1.44 in September to last month's $1.43. This downward trend stands in sharp contrast to last year, when keyword prices rose 24 percent in the fourth quarter. Fathom compiles the list based on prices of generic keywords--but not brand names or proper names.

Fathom Online Keyword Price Index: Year-over-Year

	12/04	12/05	% Change
Automotive	$1.41	$1.52	+8
Consumer Retail	.58	.51	-12
Consumer Services	1.36	.89	-35
Travel /Hospitality	.97	.99	+2
Investment	1.76	1.60	-9
Mortgage	4.79	3.30	-31
Broadband	1.63	1.56	-4
Wireless	1.09	1.09	0
Average	1.70	1.43	-16

Source: Fathom Online

On a year-over-year basis, keywords in the mortgage and consumer services categories saw the biggest dips--31 percent and 35 percent. The mortgage terms--which peaked in April at $6.49--appear to have dropped as the housing market has cooled. Consumer services keywords peaked last December at $1.36, and haven't surpassed $1 since August.

But even as the average cost of individual keywords is falling, overall spending on search marketing is rising. Brokerage house Piper Jaffray last week raised its price target for Google to $600 from $445, based in part on estimated search marketing revenues.

Fathom Online's Gregg Stewart, senior vice president, channel management and marketing, said his agency continues to see an increase in search volume. "The pie is still increasing pretty dramatically," Stewart said. He added that more advertisers, especially in the business-to-business space, continue to enter the space.

Fathom found that year-to-year, the only categories to post increases were automotive (8 percent) and travel (2 percent). On a monthly basis, the categories that showed an increase were wireless (15 percent), consumer retail (13 percent), automotive (10 percent), and travel (2 percent).

Fathom Online Keyword Price Index: Month-over-Month

	11/05	12/05	% Change
Automotive	$1.38	$1.52	+10
Consumer Retail	.45	.51	+13
Consumer Services	.90	.89	-1
Travel /Hospitality	.97	.99	+2
Finance/Investing	1.80	1.60	-11
Finance/Mortgage	3.67	3.30	-10
Broadband	1.56	1.56	0
Wireless	.95	1.09	+15
Average	1.46	1.43	-2

Source: Fathom Online

Fathom tracks keyword prices daily. The keyword list consists of 500 generic keywords across eight categories for the top five ranked positions on selected search engines. The aggregate data contains no proper or brand names. Fathom states that the pricing fluctuations should be viewed in the context of the eight categories reported, and not as a proxy for the entire search industry.