GroupM Search predict increase in cost-per-click with Yahoo and Microsoft
Tue, Sep 21, 2010
Tue, Sep 21, 2010
ST LOUIS — Advertisers could see a cost-per-click (CPC) increase up to 78 percent above current Bing CPCs as a surge of competitors move to one platform with the Yahoo and Microsoft Search Alliance transition, a study completed by GroupM Search revealed.
Based on the impact two industry milestones had on advertisers – Yahoo’s introduction in 2007 of Panama and Microsoft’s transition in 2009 from MSN Live to Bing, GroupM Search projects a three-week period of volatility post-transition before costs begin to settle. At the campaign level, advertisers can expect an average increase of 64 percent over current Bing CPCs for unbranded keywords and 78 percent for branded keywords during this time. Once the marketplace settles, CPCs on Bing will rest at 13 to 23 percent above current Bing CPCs for unbranded and branded keywords, respectively.
“Any time you interject change into the auction you invite pricing pressure,” said Chris Copeland, chief executive officer of GroupM Search. “In this case, we see historical evidence that suggests regardless of the bid tools and the preparation, a period of short-term volatility will exist.”
The study was completed by GroupM Search’s Predictive Insights unit, a team comprised of econometric statisticians and mathematicians with expertise cultivated in the area of search marketing. GroupM Search looked at current and historical paid search campaign data to estimate cost implications and how long it will take advertisers to return to equilibrium after this shock to the market. The study included campaign data of 12 market-leading clients who have maintained a steady presence on both Yahoo and Microsoft’s search networks dating back to 2007.
The insights from this study are important for advertisers because it allows advanced preparation for what to expect from this transition.
“If three-week volatility and CPC increases can be countered through better understanding of competitive sets, sophistication of those advertisers and what strategies they use today, then this research will have served our client base well,” said Copeland. One of the most important insights from the study is the understanding of the number of advertisers with paid search campaigns unique to Yahoo that potentially will now be running on the Microsoft adCenter platform. Within the search marketing campaigns analyzed, on average only 27 percent of the advertisers’ competition for branded and unbranded keywords were running on both Yahoo and Bing.
GroupM Search projects that advertisers unique to Yahoo moving to adCenter could lead to a 74-percent increase in competition levels on Bing than exist at present. This increased competition will be the greatest factor for the amplification in paid search costs, the study revealed. In a pay-per-click auction system, such as paid search, the number of competitors matters greatly in the final price of the item because each competitor vies for its desired position.
SEARCH ALLIANCE IMPLICATIONS STUDY – ADD ONE
“The industry has long known the variances of performance between Yahoo and Bing....
Based on the impact two industry milestones had on advertisers – Yahoo’s introduction in 2007 of Panama and Microsoft’s transition in 2009 from MSN Live to Bing, GroupM Search projects a three-week period of volatility post-transition before costs begin to settle. At the campaign level, advertisers can expect an average increase of 64 percent over current Bing CPCs for unbranded keywords and 78 percent for branded keywords during this time. Once the marketplace settles, CPCs on Bing will rest at 13 to 23 percent above current Bing CPCs for unbranded and branded keywords, respectively.
“Any time you interject change into the auction you invite pricing pressure,” said Chris Copeland, chief executive officer of GroupM Search. “In this case, we see historical evidence that suggests regardless of the bid tools and the preparation, a period of short-term volatility will exist.”
The study was completed by GroupM Search’s Predictive Insights unit, a team comprised of econometric statisticians and mathematicians with expertise cultivated in the area of search marketing. GroupM Search looked at current and historical paid search campaign data to estimate cost implications and how long it will take advertisers to return to equilibrium after this shock to the market. The study included campaign data of 12 market-leading clients who have maintained a steady presence on both Yahoo and Microsoft’s search networks dating back to 2007.
The insights from this study are important for advertisers because it allows advanced preparation for what to expect from this transition.
“If three-week volatility and CPC increases can be countered through better understanding of competitive sets, sophistication of those advertisers and what strategies they use today, then this research will have served our client base well,” said Copeland. One of the most important insights from the study is the understanding of the number of advertisers with paid search campaigns unique to Yahoo that potentially will now be running on the Microsoft adCenter platform. Within the search marketing campaigns analyzed, on average only 27 percent of the advertisers’ competition for branded and unbranded keywords were running on both Yahoo and Bing.
GroupM Search projects that advertisers unique to Yahoo moving to adCenter could lead to a 74-percent increase in competition levels on Bing than exist at present. This increased competition will be the greatest factor for the amplification in paid search costs, the study revealed. In a pay-per-click auction system, such as paid search, the number of competitors matters greatly in the final price of the item because each competitor vies for its desired position.
SEARCH ALLIANCE IMPLICATIONS STUDY – ADD ONE
“The industry has long known the variances of performance between Yahoo and Bing....