Paid Search costs soar following Google policy change

Elizabeth Clifford-Marsh, Revolution UK, 27 August 2008, 10:22am

LONDON - The cost of running paid search campaigns has rocketed by nearly 20 per cent since Google changed its trademark rules earlier this year.

Google scrapped rules preventing advertisers from bidding on branded keywords on 5 May. The change means consumers searching for specific brands, such as Nissan, may now receive sponsored listings for their closest rivals.

Latitude chief sales and -marketing officer Neil McCarthy claims that costs have soared by as much as 40 percent since Google's ruling, but have now settled to a 17 per cent increase. The search agency tracked a range of keywords across its client list before and after the changes.

The cost increase is being driven by competition for mid-range branded keywords. It is uneconomical for competitors to bid for well-known brands, as consumers are specific about what they are looking for, according to Latitude.

New figures show that nine out of 10 internet searches are for brand names rather than generic terms.

According to Hitwise's report Managing Your Brand Online, 88 per cent of UK internet searches for the 2,000 most popular search terms in May 2008 were for branded terms - up from 65 per cent in 2005.

The 10 most popular searches were brand destinations, led by Facebook, Bebo, YouTube and MySpace. The report found that 8.7 per cent of searches for the top 100 online brands in the UK results in a visit to a website not operated by the brand owner.

The Search Works group retail account director Stewart Hunter said that while the top searches are for brand names, retailers will still gain large amounts of traffic from searches for generic terms.

For more details see the September issue of Revolution, which is out now.

Tags: Digital, Web, Digital Media, Media

You must log in to use Clip & Save

All Comments

steve buchanan - 27 August 2008

bollocks

Gareth Jones - 27 August 2008

Would you perhaps like to offer a more constructive comment Steve?

Amanda Davie - 27 August 2008

Higher PPC costs will still 'cost in', though, if advertisers are measuring the true value of this traffic.

And a 20% increase in brand term costs is still a damn sight more cost effective than TV as a brand channel!

An increase in PPC media costs will force brands to look more closely at the quality of their content - this is the area with the biggest cost efficiency potential and we've seen our PPC rates drop by 96% simply by applying some traditional SEO optimisation to clients' PPC landing pages. Increase your quality score and you're less reliant on your media spend.

(I say with a healthy dose of scepticism as I do think Google are quite happy to take advertisers' money simply by continually shifting the goal posts!)

steve buchanan - 28 August 2008

sorry... but it is a non-story linked to a fundamentally flawed report. reporting a 20% uplift to the cost of brand related terms, which were presumably being traded at £0.02 - £0.03, does not make the cost of paid search "soar" !

Google didn't make the change to increase the price of a click or to arrest any perceived long term decline in click price. They did it to get rid of the burden of dealing with hundreds of trademark protection queries on a daily basis. The process of industries and advertisers policing their own trademarks is already under way and, judging by the situation in the US, it won't be long before the impact of this policy change is completely negligible.

sorry about the bollocks bit.

Andrew McCormick - 28 August 2008

Good points Steve. I don't think the US story has run its course though. Nike is currently in dispute with a sportswear firm that's been bidding on Dri-Fit, a Nike trademark. It may be an isolated case but I think as companies see rivals derive sales from bidding on their trademarked terms they may take action.