PPC Growth & Inflation

A look at why PPC costs are rising each year.

If you’ve run PPC (pay per click) ad campaigns for an extended period of time using a service like Google Adwords, you’ve probably noticed an increase in the average cost per click for many search ads over the past couple years.

Which brought up a great question by a colleague of mine recently: “How much do PPC (pay per click) costs typically increase year over year?”

Unfortunately, even the big search marketing outfits haven’t provided a real go-to source that addresses this topic. I think a big part of it is they don’t want to scare off clients by telling them they can expect to pay 8-12% more on their PPC campaigns if they want to continue to compete each year.

From what I’ve seen the past couple years, the numbers jump from 5-12% in terms of average cost per click. So there’s no question CPC costs are trending above inflation. Google has confirmed that much.

And with companies continuing to spend more on online ads each year — search marketing is growing at a 16% clip — CPC continues to grow due to factors that are outside Google’s control.

For example, when a newly funded company comes into the space, and they want to reach the top spot for a low-quality-score keyword, they have to throw a lot more money at it than proven companies with a quality score/low bid. But to get to No. 1 quicker, new companies are more likely to skip the organic route and big as high as they need to knock out the established brands that are tightening their belts years into the business.

We see the buy-traffic-first approach all the time, and it drives up the average CPC substantially. And with more and more online competition each year, it’s a battle we’re already fighting on the PPC front.  

So you can see why the average CPC for Google PPC continues to grow: In Q3 of 2011, average CPC increased 5% over Q3 in 2010. In Q2, it was 12% over Q2 2010. In Q1, it was up 6%.

So I think the 8% number I frequently point to is pretty solid if that’s what you wanted to project over the next couple years. The way search marketing is growing, even if Bing-Yahoo were to do something major in 2012-13, I don’t see those numbers taking a hit at all.

All of which makes organic content and online marketing efforts that much more important moving forward. Blogging, social media and email marketing are as crucial to your overall marketing strategy as ever.

Build out those online marketing strategies now, and you’ll have no problem growing your business and remaining competitive in the online marketing space … no matter how out of hand PPC big inflation becomes in the future.

Interested in learning more? Contact us today or call (805) 703-3372 for a free consultation.