IPA search study shows continuing trend of increased Cost Per Click

New research from the IPA reveals a continuing trend of declining click through rates (CTR) on Google in paid search advertising but with increasing cost per click (CPC).

The data, covering January 2008 to March 2009 and submitted by 12 agencies on 47 brands, shows that average CTRs have declined from around 40% to around 20%, whilst average CPCs have increased from 6p to 29p.

Rob Taylor, search director, BLM Quantum, said: “What we are seeing is a four-fold increase in brand CPCs in just over 12 months. This may be a reflection of the fact that brand terms are becoming more competitive in line with a decline in the economy.

“As search is so measurable, clients are beginning to realise that competitive bidding generates positive ROI, even though the quality score is against them and CPCs are high.

“It is important to remind clients to defend brand terms, but also to consider their competitive position as rivals may also be pitching to their customers at the same time.”

Arjo Ghosh, chair, IPA Search Council and CEO, iCrossing, said: “Search has and still is a very effective way of getting people who are looking for your brand to your site. The rising costs perhaps signify that we are becoming victims of our own success and that the market is just developing naturally and finding its point.

“The declining CTR challenges the notion that Google’s trademark change was in order to benefit the user. To understand the full picture it would be good to see an analysis of user behaviour in paid and natural search to get a fuller understanding of what’s happening here. Data like this often poses more questions than it answers and we look forward to continue our engagement with Google on this.”