Last week the IPA Search Council in the UK released trend data for selected brand terms across 47 UK advertisers on Google. The trend from January 08 to March 09 showed a substantial decline in click-through rate from ~40% to ~20% and a near five-fold increase in CPCs from £0.06 to £0.29. Most of that CPC increase has occurred since October last year. Unfortunately, the IPA didn't say much about exactly how the data was compiled, so we decided to look at Efficient Frontier advertisers in the UK to see if we could see the same dramatic trends.
To make the data as fair as possible, we looked only at high volume, exact match keywords for clients that had continuously advertised since Feb 08. Surprisingly, this eliminates many advertisers, as some companies tactically switch brand terms on and off. Also, we decided to use a median average (middle point) instead of a mean (adding the total then dividing by their count) so that high impression keywords can't distort the overall results.
The following graphs show the results. The blue line is the median of the sample and the grey area shows the maximum and minimum of the range in the sample. Click-through rate has dropped on these keywords from ~49% to ~34%, not quite as large as the IPA analysis, but significant nonetheless.
The CPC picture, however, doesn't reflect what the IPA reported. Although there has been a big percentage increase of 55% from £0.029 to £0.045, we are nowhere near the absolute levels cited by the IPA. There's two possible technical reasons why this is. First is that the IPA data sample may not be restricted to just exact match, which leaves it open to much more volatility in the keyword marketplace. The second is that the IPA IS using an arithmetic mean for the average, which could be skewed if there are a few relatively high impression outliers in the sample. There's also a spike in May 08 when Google relaxed its trademark policy in the UK.
The IPA's figures are a worry for brands. If brand prices indeed increased from £0.06 to £0.29 there could be a dramatic impact on client's search efforts - a forced redistribution of budgets to brand terms. Such a lift would also suggest both increased competition and a large shift in quality score driven discounts for brand owners.
Consistent with the IPA figures, Efficient Frontier data indicates that increased competition, in part a result of Google loosening TM policy, has negatively impacted CTR. Contrary to the IPA figures, however, our data indicates brand pricing has not risen to a level that would suggest significant changes to strategy and budget allocation. We're watching the trends and working with our clients to adjust if and when necessary.
Jonathan Beeston
Client Service Director, Europe
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