Keyword Prices Rise to the Holiday Occasion

Keyword prices are on the rise in the lead up to the holiday season, according to separate research findings from DoubleClick and SEMphonic.

But the increases have been gradual rather than sudden, the numbers say.

DoubleClick’s Performics unit reported cost-per-keyword (CPK) rose gradually in the third quarter, from approximately $20 per keyword in July to about $26 in September. CPK is a metric meant to get at the “total cost of ownership” of a term, Performics said. Not surprisingly, those third quarter increases have continued this month. SEMphonic reports marketers in several categories raised their top bids in the first half of November. Keyword costs for kitchen, food, and wine-related terms went up by 8 percent; and they rose by the same amount for arts and entertainment terms. Prices for keywords about apparel and accessories rose by 10 percent.

It’s worth noting the prices are only higher for low-volume keywords, which suggests marketers are broadening campaigns to include more terms, and not necessarily competing more fiercely for common keywords. Not yet, anyway.

SEMphonic characterized the trend as “a slow but steady rise in advertising costs as the holiday season approaches, but not a significant jump in pricing before Black Friday.”

The Performics research also found that lower-ranked keywords are generating better conversion rates. Sales coming from listings ranked second or lower went up by almost four percent during the third quarter. Keywords ranked fifth or lower “drove far more impressions than conversions,” the study found. The report suggested this may mean marketers are starting to use lower-placed ads for branding purposes.

SEMphonic’s study examined 70 low- and high-volume keywords in eight categories. DoubleClick’s Performics 50 draws data from 50 active e-commerce and lead-based SEM campaigns.