Keyword Prices Crash, Create Opportunity For Search Marketers
- by Joe Mandese @mp_joemandese, February 3, 2005
The overall cost of a keyword in the Fathom index fell 3 percent from December 2004 prices, reflecting what Fathom analysts believe to be a post-shopping season malaise on the part of some search marketers, although they consider the rollback in search costs to represent an opportunity for astute marketers in some categories--especially wireless telecommunications--to get a good deal on bargain basement search prices.
The average cost per keyword in the wireless category plummeted 28 percent between December and January, the steepest drop of any category tracked by Fathom in the five months it has been indexing keyword prices.
"Wireless was certainly a surprise. If you look at the trend over the past five months, the wireless has been the most stable," notes Matt McMahon, executive vice president-media and marketing at Fathom. McMahon theorizes that many wireless marketers may have invested heavily in keywords during the build-up and through the holiday season--on the assumption that demand from consumers would be greater for their services, especially from people giving cell phones as gifts.
"It's an assumption," notes McMahon, that has created an opportunity for wireless search marketers to gobble up cheap deals, which is something Fathom has recommended its clients do.
McMahon says Fathom is working on expanding the index to incorporate more of the macro factors that can influence consumer demand within specific search categories, and which ultimately impact conversion rates and the yield on keyword buys.
For example, he notes that keyword costs in the mortgage financing category have been building steadily since Fathom launched the index in September, rising 56 percent from $3.17 in September 2004 to $4.93 in January. McMahon says it is more than coincidence that this corresponds to news speculating that mortgage financing rates will soon spike.
"We are watching the 30-year fixed rate very closely," he says. "The implicit assumption is that if people are going to refinance, they're going to do it now, and that's why marketers are bidding up and up and up on mortgage keywords. We do know that external factors affect search conversion rates, which then in turn affect the costs people will pay for keywords."
McMahon says that after five months it's still too soon to determine whether there are normal cyclical or seasonal patterns to keyword demand, but speculates that the industry will likely see some spikes in some categories around key holidays coming up, including Valentine's Day and Mother's Day.
Fathom Online Keyword Price Index (KPI)
09/04 10/04 11/04 12/04 01/05
Automotive $1.54 $1.39 $1.35 $1.39 $1.34
Retail $0.32 $0.48 $0.60
$0.48 $0.52
Consumer Services $0.54 $0.96 $1.27 $0.96 $1.29
Travel/Hospitality $0.64 $0.85 $0.90 $0.85 $0.88
Finance/Investing $1.76
$1.60 $1.70 $1.60 $1.73
Finance/Mortgage $3.17 $4.31 $4.74 $4.31 $4.93
Telecommunications/Broadband $1.89 $1.78 $1.59 $1.78 $1.67
Telecommunications/Wireless
$1.09 $1.06 $1.09 $1.06 $0.79
Overall Average $1.37 $1.55 $1.66 $1.70 $1.64
Source: Fathom Online. Indices are based on a weighted average of
bid prices of the top five ranked positions across U.S. Tier I, II, and III Search vendors of keywords within an SEM campaign. The industry keyword list is composed from the 500 most queried keywords
within an industry. The keyword list does not include brand keywords. The KPI's goal is to represent a typical SEM industry campaign and track the cost per click (CPC) over time without being
subjected to abnormal search activity due to random events regarding well-known industry brands.
