What is Causing The Increase In Brand CPC?

This year, there has been a rather alarming trend happening in the world of branding – brand CPCs have been rising steadily, despite the strong quality score that a brand has for their terms. It’s always understandable if generic CPCs rise, as these are common across more than one industry. Brand CPCs, however, are generally something steady, as there is a low level of competition for the terms – though this does depend on the brand.

No one wants their brand CPCs to rise, so it is important that we understand why this has changed. Recent AdWords algorithms changes combined with the paid search space having much higher competition gave the search CPCs a 21% increase in 2017 compared to 2016. It’s important to look closely at the trends across the board alongside the changes that are specifically related to Google to be able to pick apart what it is exactly that is causing the rise in brand CPCs.

Upping the Competition – And the Cost

Television advertising has always been the place where the most money was spent on advertising. Back in 2017, however, the US spend on digital advertising rose roughly 16%, meaning that the projection for reaching $83m would – for the very first time – surpass what was spent on TV advertising. Almost half of that money would have been spent on Google and Facebook, as there is a fierce competition to dominate when it comes to online advertising. This then means that there is higher CPCs year over year, and the acquisition costs are higher, including brand terms.

Every year, CPCs are rising across all platforms and all devices. Generic CPCs showed a downward trend of 4% in Q3 compared to Q2, and yet the increase for Google year on year was 27%. There are reports from 2017 showing that CPCs increased – by network and device - as follows:

• +22% tablet,
• +31% search,
• +28% on all devices,
• +32% mobile,
• +15% shopping,
• +28% desktop.

Year on year impression and click declines were 23% and 9%, and the drop in clicks has been a direct result of higher CPCs. The higher the cost, the less traffic is driven.

Google Are At Fault

Back in 2016, Google changed the game by removing right rail ads from paid search results. When there is less ad inventory available, there is more competition. The May 2017 update that Google performed reprioritized keyword bids over things like the quality score. The mobile search competition attribute to the rising CPC costs, but the main blame is due to that earlier mentioned May 2017 update. How else was Google to blame?

1. Exact match keywords changed, which allowed for ‘close variants’ to be recognized instead of just the ‘exact match’ queries.
2. 30% cap for enhanced CPC bidding was removed, for both location and audience.
3. Google could then increase the maximum bid amount that you had earlier specified.
4. A change that was meant to increase conversions has implications for the rising cost of bids, too.

Customer Targeting

Other than brand CPCs, there are still other ways that you can target customers. Here are some of the popular options:

• Paid search
• Users of TVE (TV everywhere) have grown exponentially over the past few years. Digital video growth is expanding at a massive rate.
• Invest in great vlogs and video content and reach out with video channels to reach your target audience.
• Pour money into remarketing – or retargeting, if you prefer. It’s available for both search and display ads in Google AdWords.
• By investing in both search and display, you can hyper-target your audience. Response rates, and thus your ROI then end up much higher.
• Did you know that your conversion rates when remarketing increases when customers see your ads? Display ads can convert as well as search!
• Traditional search ads may not be as ROI-favourable because of the CPCs going up, but in Search, you could show your ads only to those who have visited your site.

Building Bigger Remarketing Lists

One of the biggest challenges out there for those in advertising is how they can get people to their website in the first place? You can only build better and bigger remarketing lists if you get those clicks at all, so driving traffic needs to be a priority. Here’s how you can get those lists built to help solidify your ROI:

• Stay Vigilant. In 2018, you need to keep your eye on the prize through to Q4, continuing to focus on your keyword search. It’s going to stay an important part of your digital strategy. You can do this by staying abreast of all AdWords changes, online trends, and influencers on how people search for information.
• Keep Monitoring. Keyword CPCs should be kept a close eye on and checked regularly to ensure that they are optimized.
• Leverage. Remarketing for search, device-specific bid modifiers and ad extensions are all the tools that you need to reach the right people who are searching for your offered solution in the most efficient way possible.
• Build Your Brand. Branding is key for a business, and you can’t just rely on search to help your brand to grow. You need to be constantly on the lookout for ways to build the public interest in your brand. CPCs may be rising in generic search, remarketing and branded CPCs are, however, staying competitive. These can provide a much better ROI and value to your business.
• Extend Your Reach. We mentioned vlogging and video marketing earlier, and you can get users as familiar as possible with your brand by using these platforms to encourage them to visit you. This can help to build your remarketing list and soar above the heads of your competitors.

Once you know how the CPC trends are impacting your marketing strategy, you can continue to build your brand and reach your customers. Adaptation is key in this part of your business, as things can change in a second.

At Bright Vessel, we can provide more information about this or any other related-topic that you are interested in. Please contact us, we are always willing to help you and assess you to fulfill your needs and make your brand shine.