Is the falling cost of advertising a deliberate Google strategy?
Google’s advertising world is a fascinating landscape, occasionally alien and hostile; well at least for those concerned with Digital Marketing!
The last time I wrote about Google advertising was this summer when Google’s Knowledge Graph and Power Searching course suggested a valid theory around Google trying to retrain our eyes to see the right hand side of Google’s search results.
In that post we looked at a WordStream infographic which explained how PPC ads were “taking over” the search results for Google. Less and less search results space is given to organic results for example, when I was running some checks earlier this week I counted 9 ads and only 2 organic results above the fold.
Interestingly enough, the increasing space given to ads may actually be balancing things out in the Google economy – it sounds crazy but read on…trust me, I’m going to share another WordStream infographic from Larry Kim, founder and Chief Technology Officer at WordStream.
While Google’s reporting lower than expected results to the market, WordStream’s report highlights that they actually gained $10.8 billion in advertising revenues in Q3, a 5% increase from Q2 and a 16% growth over the previous year. The infographic below shows these key stats and more, but let’s look at how this may be balancing things for advertisers, in particular those with more limited budgets.
A ray of hope for advertisers
Look at the top section of the infographic, Google Search’s figures are on the left and Google Display Network is on the right.
- Average costs per click have declined for both -16.5% for Search and -18.2% for the Display Network
- Click-through rates are mixed -12.4% for Search and +13.8% for the Display Network
- Ad impressions and clicks have increased; clicks are up by 21.6% and 29.1% respectively.
As the supporting notes suggest, this may be due to the increased space available for adverts and part of Google’s cunning plan but whatever the cause, the result is a lower cost per click for more impressions.
This result is what could be viewed as good news for organisations on a tight budget; lower cost per clicks and higher impressions opens the door to those who were being priced out of running paid search campaigns.
Final Points and a Question
It’s always worthwhile checking the data used to create the report,for example in this work each account includes its performance from the last 90 days this is really a rolling average rather than a set quarter’s worth of data. e.g. an account evaluated on July 1 will of course include the data for 90 days prior, so Q2.
Credit where it’s due, WordStream are always good at sharing the logic and known issues around their work and if you look at the Facts article Larry Kim has flagged some key known issues in the report, including a higher concentration of English speaking countries being included, inclusion of unrealistically high conversion rate outliers and smaller data sizes when you drill down into the different industries. Even better, changes for the future are also flagged, like a larger number of accounts being analyzed or the unrealistic conversion rate outliers being removed.
Now I did mention there being a question in this section, and this is direct from Larry Kim at WordStream. He wants to get feedback about what should be included in the data index for the future e.g. Mobile vs Desktop Search. The aim here is to build / improve WordStream’s data set with a view to start releasing more regular updates about the paid search industry. So…
…What Google statistics would you like to see in the future?
Due to recent changes in Google’s API policy WordStream had to remove access to the infographic that went this this post. You can read more about the changes and the action that WordStream has taken in the following blog post: http://www.wordstream.com/blog/ws/2012/11/16/important-update