Finance CPCs continued their upward march in April as CPCs climbed 11.3% MoM and 40% YoY. Automotive and Retail CPCs remained stable as CPCs increased 1.9% and 4.7% MoM respectively.
Note on Travel CPCs: We saw a lot of variance in our travel CPC data and decided not to publish this until we felt the numbers were steady and reflective of the broader market.
Dr. Siddharth Shah
Sr. Director, Business Analytics
CPC (cost per click) trends in March were mixed. Increased acquisition activity from financial institutions contributed to a sharp rise in CPCs in March. In contrast, CPCs in travel fell both MoM (month over month) and YoY (year over year), indicating weakness in the sector. Retail CPCs continue to increase as automotive CPCs fell slightly.
Our latest numbers also reveal that spend in both finance and retail have increased substantially YoY. We will report in detail on these trends in our upcoming quarterly report.
Dr. Siddharth Shah
Sr. Director, Business Analytics
CPCs in February, increased more than 15% YoY in the Finance, Travel and Automotive sectors while they remained relatively flat in retail. We are seeing increased competition in the financial sector which drove up spend by 15% YoY in February, primarily driven by CPC increases. On a MoM basis, Finance saw a 9.1% seasonal decline which was lower than the 16% decline in the same time frame last year.
Dr. Siddharth Shah,
Sr. Director, Business Analytics
On a monthly basis, we will now be publishing our monthly CPCs by category along with some trend analysis. For January we have the following numbers:
As the new year begins, it's no surprise that online retailers cut back search engine spending as the shopping season wanes. The US retailers among Efficient Frontier's client base decreased spend by 31% from December 2007 to January 2008. Travel, on the other hand, receives a huge surge in consumer interest, and therefore ad spend, in January - our travel search engine spending was up 64% from December 07 to this January.
Search spending from finance, auto, and dating advertisers increased slightly from December to January. The news here is that the December - January growth in the finance sector was much slower this year than last. Financial advertisers spent 24% more in January 2007 vs. December 2006, while this year spend grew only 3% in that period. It seems the economic slowdown, particularly in the mortgage space, could impact the search engines.
How do you decide how much of your search budget to allocate to contextual advertising? The quick answer: as much as your budget will allow that allows you to reach your conversion goals. However, data shows that content works better for some verticals than others. Businesses whose websites match the mindset of those browsing related content will generally have more success with contextual advertising.
The average Efficient Frontier client spends 3.4% of search budget on content, but that number varies widely by vertical. Because Efficient Frontier's portfolio optimization algorithms look at the entire portfolio of keyword bids across both search and content, where spend is allocated is an indication of the effectiveness of that channel.
Dating sites experience the most success with content advertising - in December 2007, 6.4% of Efficient Frontier client spend in the dating vertical was allocated toward content. it makes sense that content is a good match for dating sites, since users are generally in the mood to meet people when browsing sites where dating-related content ads appear, and thus more likely to take the time to fill out a registration form
Automotive advertisers spent slightly more than average on content advertising in December 2007, at 3.8%. Again, the mindset of those browsing auto-related content is similar to the mindset of those visiting an auto website.
Financial advertisers' allocation of spend toward content was about average in December 2007, while Travel and Retail advertisers spend less than average on content. It seems that content advertising works very well for advertisers that have content to offer, and not as well for those for whom a conversion is a purchase. Search and shopping engines are more targeted channels for advertisers seeking to increase purchase conversions, as the mindset of the purchase-driven user is much more focused than the content-browsing user.
To learn about best practices for content advertising, read this post.
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