Google Mobile Brand CPCs Skyrocketing…Again

Advertisers won’t be very pleased with this recent trend.

Beginning in the final week of June, average cost-per-click for branded keywords jumped significantly on phones and is now about 25%-30% higher than at the beginning of May for the median Merkle advertiser.

By comparison, brand CPCs have held relatively steady for both tablet and desktop devices over the past couple of weeks.

While Google recently rolled out promoted pins as well as local search ads in Google Maps for mobile, these changes in CPC don’t appear to align with any uptick in traffic to suggest that these new brand ad placements are driving the increase in cost, and phone share of brand traffic has remained relatively steady:

Here We Go Again

In early-2015, brand CPCs rose considerably overall, and by the end of Q2 were 22% higher than the historical average over the previous four years.

This coincided with a considerable increase in the first page minimum bids reported by Google, which also rose for non-brand text ads.

Coupled with additional evidence such as fewer ad impressions and average position moving further up the page, it seemed fairly likely that Google itself made changes to the way it was serving ads which dramatically increased CPCs and reduced click growth.

Interestingly, this time around we actually see a decline in both first page and top of page minimum bids for brand keywords coinciding with the increase in phone CPC:

This is a bit confusing given there’s been no negative movement in brand CPC on desktop or tablet and only positive movement on mobile.

First page and top of page minimums are calculated for all device types combined, so changes in traffic mix by device could potentially impact these estimates. While there’s been no movement in brand traffic mix by device to suggest that this is the case, it’s possible Google’s calculations might be getting adjusted to more heavily account for mobile devices, which carry a lower CPC than desktop devices.

Regardless, these lower estimates are not leading to lower CPCs on any device and fly in the face of the increases we’re seeing on mobile devices.

Conclusion

In response to the apparent increases, some Google reps are recommending slowly lowering bids for advertisers seeking to rein in phone CPC. This is a strategy many advertisers began implementing with the significant increase in brand CPC observed in early-2015, and can help to quell the CPC growth.

Increased competition can impact brand CPCs for some advertisers but is almost certainly not the cause of a widespread increase in CPC, and this recent CPC growth is very likely the result of Google changes to some aspect of the auction. While it’s not immediately clear what might have changed, the impact appears to be clear.

For now, advertisers should remain vigilant and attempt to minimize the damage by adjusting bids as necessary.

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