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Reasons for a slow increase in PPC prices?

[ Edited ]
Visitor ✭ ✭ ✭
# 1
Visitor ✭ ✭ ✭

What could be some of the contributing fatcors to a slow increase in PPC prices? We have a campaign that started the year (2012) with an average CPC of around £0.62 - but has slow increased all the way to £1.13. The last two months have seen quite a large increase seeing as this is our low season.

 

The only thing that's sticking out from analyising the data is our conversion rate is increasing - it went from around 9% to around 13% in the space of 3 months. Another thing I've noticed is our avg position is also at its all time best too, with last month being at 1.9.

 

We have conversion tracking linked up to our Adwords account too. Could this possibly be a result of smart pricing since the ads are now performing very well for us?

 

If anybody can shed some light on this that'd be great. Also, if anybody has some suggestions on how to try and lower our CPC they'd also be appreciated.

 

Thanks!

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Accepted by topic author ChrisWicks
September 2015

Re: Reasons for a slow increase in PPC prices?

[ Edited ]
Visitor ✭ ✭ ✭
# 3
Visitor ✭ ✭ ✭

Hi Jon, thanks for your reply. Yes we're using auto bidding right now. Understandable, our CPC on average for other campaigns forms a bell curve since summer is our busy period (travel).

 

Which is why the unusual hike in average CPC isn't making a whole lot of sense. What we're paying now is a lot more expensive then our most competitive period.

 

We did add some long tails at around the time when this increased, I just did a filter for <= 5 in quality score and only a small handful of keywords have 4-5. Overall the campaign is "above average" in terms of quality score. CTR all remains stable, some months it's up and some it's down but overall it's pretty stable at around 7% on average. 

 

So right now I'm still at a loss, like for example I'm looking at one long tail keyword which has a £2.14 CPC - couple of clicks total, 10/10 quality score and a 20% CTR we have quite a few keywords like that.

 

Thanks,

 

Chris

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Re: Reasons for a slow increase in PPC prices?

Top Contributor
# 2
Top Contributor

Hi ChrisWicks and welcome to the forum.

 

First off, I presume you're using some form of automated bidding rather than manual bids.  If you are using manual bids, what's your current Max. CPC?


CPCs are not a static beast.  Depending upon the product and the market they can change markedly over time and a year is certainly long enough for some substantial changes.  CPC costs are not "fixed" at one price for a keyword but change depending upon the competition and other factors and certainly one of the most likely reasons for an increase is an increase in competition for those keywords.  Conversion tracking won't be affecting your CPC and "smart pricing" only has the effect of decreasing bid amounts, not increasing them.

 

Another possibility is that your Quality Score has changed over time.  Quality Score is a key component in Ad Rank and if you're using automated bidding it's possible Adwords is having to increase your CPC to match a falling Quality Score.  Have you made any changes to your site over the past year?  Can you plot a graph of CTR for key Keywords over that period... is it falling?  What's your current CTR for your best Keywords?

 

Come back to us with some answers and we'll delve some more.

 

More about Quality Score

 

Jon

 

AdWords Top Contributor Google+ Profile | Partner Profile | AdWords Audits
Marked as Best Answer.
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Accepted by topic author ChrisWicks
September 2015

Re: Reasons for a slow increase in PPC prices?

[ Edited ]
Visitor ✭ ✭ ✭
# 3
Visitor ✭ ✭ ✭

Hi Jon, thanks for your reply. Yes we're using auto bidding right now. Understandable, our CPC on average for other campaigns forms a bell curve since summer is our busy period (travel).

 

Which is why the unusual hike in average CPC isn't making a whole lot of sense. What we're paying now is a lot more expensive then our most competitive period.

 

We did add some long tails at around the time when this increased, I just did a filter for <= 5 in quality score and only a small handful of keywords have 4-5. Overall the campaign is "above average" in terms of quality score. CTR all remains stable, some months it's up and some it's down but overall it's pretty stable at around 7% on average. 

 

So right now I'm still at a loss, like for example I'm looking at one long tail keyword which has a £2.14 CPC - couple of clicks total, 10/10 quality score and a 20% CTR we have quite a few keywords like that.

 

Thanks,

 

Chris

Re: Reasons for a slow increase in PPC prices?

Top Contributor
# 4
Top Contributor

Hi Chris, do you think it could be competition?  Has someone else come into your market recently?

 

What does the Keyword Tool report for estimated CPC for some sample Keywords (don't read too much into this - they are only estimates, not absolutes)?

 

If you don't think there's anything within your account that could be causing the raise then it's possible the cause is outside.  As you may know, CPC rates have factors that are set from the behaviour of other advertisers so it's possible it's nothing to do with what you've done (or haven't).

 

It's difficult to offer more advice without knowing a lot more about the account and seeing more data/history, I'm afraid.

 

You say your CPC is typically a bell-curve - do you not normally get some increase in business around the New Year?  I haven't any travel accounts under my wing but I do know hotels and there is usually a seasonal increase in business around the Holidays...

 

Jon

AdWords Top Contributor Google+ Profile | Partner Profile | AdWords Audits

Re: Reasons for a slow increase in PPC prices?

[ Edited ]
Top Contributor
# 5
Top Contributor

I also noticed, in the past, in campaigns that were set to auto bidding, that the system had a kind of a "trend", to slowly increase the bid, over some  time. I never use anymore auto-bidding, and never found a reasonable explanation for that (QS(s) did not change significantly.)

Moshe, AdWords Top Contributor , Twitter | Linkedin | Community Profile | Ad-Globe
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Re: Reasons for a slow increase in PPC prices?

Explorer ✭ ✭ ✭
# 6
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You say you use automatic bidding so that may explain the increase in CPC. You say the position has improved as well.

You don't provide all the numbers but using some assumptions, since the conversion rates have also increased (I'm not surprised because higher ads tend to have higher conversion rates too), you are making more profits. I would not be surprised if you are making twice the profit from your ads as you were before. The CPS may have gone up by a £ or two but seems well worth it.

 

As Jon said, CPCs are not static. Many factors will affect them. The ones you have control over are your own bidding and your QS.