Marketers feel the pressure to land their brand's content and search advertisements in the first couple of spots in mobile search queries. The drive to dominate the top of the results page has sparked a bidding war that continues to drive up the cost per click.
More than 1,800 AdWords accounts managed by iProspect show that CPCs rose 36% year-on-year in second-quarter 2017, and 13% compared with the previous quarter. The increase is at the highest level since 2014.
In the Quarterly Paid Search Trends Q2 2017 report, iProspect attributes the increase to competitive pressure in mobile search and Google’s update in May to the Ad Rank calculation, a change that reprioritized keyword bids over other ranking factors such as Quality Score.
iProspect analysts believe the update will result in higher costs for some advertisers this year. "In the past, quality score has played a major role in keeping CPC low for trademark keywords," per the report. "Because the latest update has reduced the weight of quality score, that factor provides less of a counterbalance."
Mobile CPCs are still a bit lower than desktop, but they have been rising steadily since the first quarter of 2016, up 52%.
It's clear from iProspect's numbers that mobile continues to take a greater share of clicks. iProspect notes that among its clients, 60% of clicks now come from mobile, compared with 32% from desktop and 8% from tablets.
Mobile impressions rose 18% YoY in second-quarter 2017, while mobile clicks declined 12%. iProspect attributes the decline to the 52% YoY increase in mobile CPCs and the rising cost of mobile CPCs to competitive bidding wars in the search engine results pages.
During Alphabet's second-quarter 2017 earnings call on Monday, company executives noted that mobile contributed "significantly" to revenue growth. The iProspect report also indicates an increase in mobile investments fueled by advancements in attribution and online-to-offline measurements that allow for a greater degree of accuracy.
Shopping volume also rose higher than ever before. Impressions rose 78% YoY, while clicks increased 49% YoY. CPC increased 8.5%, which pales in comparison to the 45% YoY CPC increase recorded for search ads.
Shopping CPC remains lower than search ads at an aggregate level, and shopping CPCs were 29% lower overall than search in first-quarter 2017.
Data also shows that the click-through rate for Search ads rose 21% YoY, but the CTR for Shopping Ads declined 16%, mostly due to the launch of new ad formats released during the past year, which display more Shopping units per query and record a higher number of Impressions.