Fathom: Keyword Prices Fall 4 Percent In July

The price of search keywords fell last month in nearly every category tracked by search engine marketing firm Fathom Online. The average cost per click across all fields in July sunk to $1.65--the lowest since February, when it was $1.60. The decrease marked a 4 percent drop from June. Still, July keyword prices were, on average, 20 percent higher than in September, when Fathom first started publishing its keyword price index.

The monthly drop from June to July might indicate that search marketing undergoes a similar summer slowdown as does advertising on TV and other, more traditional media. In its second-quarter earnings report, Google's Chief Financial Officer George Reyes warned investors that growth this summer might lag compared to last year's third quarter, due to seasonal fluctuations.

One explanation for the anticipated summertime slowdown was that fewer consumers would be at their computers, clicking on search engine ads, during the warm weather. But, given the most recent Fathom data, it also appears that marketers are less eager to bid up keywords during the summer.

Of the categories tracked by Fathom, telecom/broadband experienced the steepest decline; it dropped 13 percent to $1.72 a click, from $1.97 in June. Finance/investing also saw a relatively large loss--9 percent, to $1.73 from $1.89 in June. Telecom/wireless fell by 4 percent, to $1.14 from $1.19. Most other categories saw smaller declines, while consumer services remained flat.

Fathom Online Keyword Price Index

09/04

10/04

11/04

12/04

01/05

02/05

03/05

04/05

05/05

06/05

07/05

Automotive

1.54

1.39

1.35

1.41

1.34

1.28

1.42

1.40

1.50

1.53

1.49

Retail

.32

.48

.60

.58

.52

.46

.51

.52

.49

.53

.52

Services

.54

.96

1.27

1.36

1.29

1.04

1.08

1.13

1.09

1.12

1.12

Travel

.64

.85

.90

.97

.88

.81

.93

.92

.87

.88

.87

Investing

1.76

1.60

1.70

1.76

1.73

1.65

1.86

2.03

1.81

1.89

1.73

Mortgage

3.17

4.31

4.74

4.79

4.93

5.10

5.39

6.49

4.52

4.66

4.63

Broadband

1.89

1.78

1.59

1.63

1.67

1.72

1.85

2.09

2.02

1.97

1.72

Wireless

1.09

1.06

1.09

1.09

.79

.77

.95

1.01

1.00

1.19

1.14

Average

1.37

1.55

1.66

1.70

1.64

1.60

1.75

1.95

1.67

1.72

1.65

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.

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