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As CPCs Rise, How Will Advertisers React?

Posted on 6.17.2013

Following the migration to Adwords Enhanced Campaigns, Google advertisers are seeing increased bid prices in the range of 6% during the last three months according to new findings from Adobe – which recently examined 100 advertisers who spent a combined $100 million spend from March through May (2013).

The industry typically experiences a slight pullback during the first quarter of the year – a result of the high spending during the Christmas holidays – but that’s certainly not the case here as for many the Adwords Enhanced Campaigns have brought an added level of complexity (and it seems cost, as well confusion).

Enhanced campaigns essentially remove the opportunity for marketers to target mobile, desktop and table devices specifically. Instead, tablet and desktop bids are forced to be identical and mobile bids are set as a percentage adjustment relative to the desktop and tablet bids. The result has apparently been an increase in CPCs.

Adobe is seeing that CPC for tablet campaigns have increased 3% and mobile CPCs a smaller, but still significant 1%, which is expected to rise as the migration deadline of July 22nd nears and more advertisers make the switch. In order to keep campaigns below cost but operating efficiently, Adobe is suggesting marketers properly set and manage their mobile bid adjustments (MBAs), which determine bids on mobile devices and how much mobile ad spend is allocated, and which are proving critical to a successful transition to Enhanced Campaigns.

Adobe’s Sid Shah, director of business analytics, indicates in his outlook that CPCs on Google will continues to increase this year (despite being flat year-over-year despite being flat for two years) as competitive pressure will drive up prices – anticipating a 5-10% rise on a YoY basis for the next two quarters.

Only time will tell how advertisers will react. Are you seeing higher bid prices than quarters past? Have you officially migrated your campaigns? Share your experiences with other Website Magazine readers by commenting below now.

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