There’s been a ton of grumbling and conspiracy theories in the SEM community about how new enhanced campaigns are just a ploy to raise CPCs and various vendors including Adobe have recently released studies claiming that CPCs are already rising by 6% this quarter.
So I was somewhat surprised to hear that the exact opposite happen in Thursday evening’s Google Earnings Conference call. Here’s an excerpt from the call:
- Paid Clicks – Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our Network members, increased approximately 23% over the second quarter of 2012 and increased approximately 4% over the first quarter of 2013.
- Cost-Per-Click – Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of our Network members, decreased approximately 6% over the second quarter of 2012 and decreased approximately 2% over the first quarter of 2013.
During the call, Google CEO Larry Page mentioned that over half of accounts have already moved to Enhanced Campaigns ahead of the forced upgrade deadline on monday.
So much for the idea that enhanced campaigns automatically means higher CPCs!
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Why are CPC’s Declining for Google Ads?
So, why are CPCs down? Only the googs knows for sure, but here are a few theories:
- Ad inventory is increasing faster than demand: Ad auction prices are dependent on advertiser competition. Since Google has been greatly expanding available ad inventory in the past quarter, perhaps demand hasn’t kept pace with supply.
- More advertisers are kicking butt with new enhanced campaign features: We’re seeing ridiculously huge performance increases and reductions in CPC for our small and medium sized business clients – these are businesses that didn’t previously have a mobile strategy in place because it was such a hassle. Could more SMBs be killing it with ECs?
- Google is Losing Advertisers due to EC’s: Perhaps advertisers are so fed up with EC’s that they’re abandoning Google and shifting spend to Bing and other ad venues, resulting in reduced competition in the ad auction.
- Fluctuations in Currency: Around half of Google ad dollars come from outside of the USA. The US Dollar has been strengthening against other major world currencies in the last quarter.
What are your theories? Let me know in the comments below!