IPA: Google’s pay-per-click costs have risen as click-through rates decrease

New data from the IPA reveals that Google’s pay-per-click costs have risen as click-through rates have decreased.

The data comes from the IPA’s Search Group, whose agencies have provided brand data on Google’s cost-per-clicks (CPC) and click-through rates (CTR) for the first time.

The anonymised and aggregated data also highlights the impact of Google’s change on trademark policy to brand keywords in May 2008.

The data was submitted by 17 agencies and provides the average monthly CPC prices and click-through rates of up to 88 brands from April 2007 to December 2008. The average brand keyword CPC increased nearly one third (31.6%) in May 2008, versus a year earlier. Across the entire 21 month period, the average CTR decreased from 28.9% to 20.9%.

Nigel Gwilliam, on behalf of IPA Digital, said: “The purpose of this study is to assist advertisers and agencies in assessing the impact to their individual accounts relative to sector benchmarks. It helps to address the information asymmetry existing between search engines and their customers, and we look forward to building on this initiative with quarterly updates into 2009.”

Rob Taylor, search director, BLM Quantum, said: “Certainly it comes as no surprise that there has been an increase in cost-per-click on brand terms since Google relaxed their trademark policy in May. However, just that this can be stated with empirical confidence is a really important step for the search marketing industry as a whole.

“The fact that such a large number of agencies elected to be involved in the study shows that there is a real movement towards maturity and responsibility, and an attempt to readdress the balance of information back towards the favour of the advertisers. I look forward to seeing how this develops.”

IPA: 020 7235 7020 www.ipa.co.uk