The cost per click rose across all devices in the first quarter of 2017, reaching the highest levels recorded to date. Mobile CPCs rose 40% YoY, closing the gap on desktop, according to a report released Monday.
iProspect's Q1 year-over-year (YoY) Google AdWords data showed strong mobile growth for impressions and clicks. The report represents in aggregate about 1,300 Google AdWords accounts and more than 176,000 active campaigns. It provides analysis and overview of the trends and opportunities relevant for brands in search advertising.
Mobile CPCs during the quarter rose higher than ever before. "This increase has limited the amount of traffic each advertiser is able to drive due to the combination of budget constraints and the increasing price tag of each mobile click," per the report. "Even advertisers who continue to increase their mobile investment face challenges as more competitive keyword bidding in search auctions drives up costs."
Mobile click share continued to grow in the quarter, too, representing 59% of all paid search traffic, as advertisers followed consumers' preference to search on mobile devices.
Interestingly, the growth of mobile impressions also continues to outpace mobile click growth. Impressions and clicks rose 56% and 13%, respectively, YoY. The report makes a note to explain that "click growth did not pace as high as impression growth despite advancements in advertisers’ abilities to measure and quantify the value of mobile paid search investment."
During the first quarter in 2017, Google Shopping (PLA) investment continued to grow, with advertisers investing 44% more YoY.
CPC for Shopping ads fell 18% YoY. iProspect attributes the decline to more clicks going toward mobile, compared with the prior year. Google also released audience-targeting options such as Customer Match and RLSA a bit later to Shopping than to Search, so during the quarter advertisers focused more on refining Shopping audience-targeting strategies. In the first quarter of 2017, 62% of clicks were on mobile, up from 49% from the year-ago quarter.
As Shopping investments rise, CPC will likely rise as well, especially if and when Amazon boosts investments in Google's ad unit. Advertisers should leverage Auction Insights reporting to monitor and identify shifts in competition and to define and prioritize reactions while focusing on data-feed optimization, Google Shopping optimization, and loyalty program efforts, according to the report.
Amazon will not have the ability to compete with Local Inventory ads, since they don’t have physical stores that house inventory, per the report -- so advertisers with brick-and-mortar locations should take advantage of this ad type as a competitive asset.
On a more traditional note, the volume on desktops and tablets fell, but Charlotte Morris, regional director of paid search at iProspect, points to the 26% rise YoY in desktop CPCs -- even higher than in the fourth quarter of 2016, as the most surprising finding in the first-quarter report."Desktop CPCs are increasing despite less overall search demand on this device type," she said. "Typically we see costs increase to mirror consumer trends as seen with the influx of competition and cost on mobile. It’s all about supply and demand and how that should economically impact price."
Morris said that demand is flooding to mobile and supply is limited, so costs continue to rise. For desktop, there is plenty of supply, demand continues to fall, marketers would expect to see desktop costs decline rather than rise.
There are a couple of theories to explain this trend. Some advertisers that invest in audience targeting on desktop are willing to pay more for certain audience groups relevant to their brand, and Google continues to adjust their algorithm.
The report also suggests that voice search remains the search method of choice for consumers. Today, 500 million people use a voice search powered digital assistant of some kind, and half of all searches will move to voice searches by 2020, according to the report, which cites Tractica.
Advertisers don't have the ability to target voice-search interactions separately from typed searches, but with the shift comes a rise in longer, more conversational queries. Advertisers will need to focus their keyword strategy to include question-based keywords including questions such as who, what, when, where, why and how, and propositions such as near me.