Keyword Prices Slip in February

In an indication of the holiday season hangover, keyword prices dropped an average of 2 percent from the end of January to the end of February, according to Fathom Online’s Keyword Price Index (KPI).

Consumer/retail and consumer services led that decline, dropping 12 percent and 19 percent, respectively. Four other categories — automotive, consumer travel/hospitality, finance/investing, and telecom/wireless — showed drops from 3 to 8 percent.

Despite the overall decrease, the mortgage/finance category continued to show gains. It rose almost 3 percent, from $4.93 to $5.10, its fifth consecutive monthly increase. The only other category that showed an increase for the month was telecom/broadband. It rose 3 percent, from $1.67 to $1.72, its third consecutive monthly increase.

“Overall, the results were in line with expectations, showing a slight average decrease based largely on seasonality,” said Matt McMahon, Fathom’s EVP of corporate development. “The drop in keyword prices creates a buying opportunity for media buyers and advertisers who can advertise on these terms with greater efficiency.”

McMahon said he expected keywords prices to start increasing again in the second quarter, with the automotive and travel categories projected to gain momentum as demand for summer travel increases. Given the relative immaturity of the bidding market, however, it remains difficult to predict how much the average keyword price is likely to swell, he added.

“It’s a young market, so it’s hard to say exactly where the prices should be,” McMahon said. “No one really knows what normal is.”

As an example of the seasonal volatilities Fathom continues to track, McMahon cited the week leading up to the Valentine’s Day weekend, when holiday-related keywords shot up an average 40 to 60 percent. Similar bursts of price increases are expected around the Easter and Mother’s Day holidays.

Launched in September 2004, KPI tracks the top 500 most popular generic keywords in eight marketing categories. Fathom plans to expand the index in the second quarter to track the top 2,000 keywords in each marketing category, roughly quadrupling the scope of its monthly reports.