Search advertisers could soon be paying up to 78 per cent more on the Bing search engine’s cost-per-click (CPC) ads for top branded keywords, according to a new study. The study, from ad media company GroupM Search, attributed the hike in prices to Bing-owner Microsoft integrating Yahoo Search onto its own search platform. Microsoft said […]
Search advertisers could soon be paying up to 78 per cent more on the Bing search engine’s cost-per-click (CPC) ads for top branded keywords, according to a new study. The study, from ad media company GroupM Search, attributed the hike in prices to Bing-owner Microsoft integrating Yahoo Search onto its own search platform.
Microsoft said it will complete the transition by the end of October, after which Bing will power all of Yahoo’s search queries.GroupM also expects a premium of 64 per cent for non-branded keywords during at least the first three weeks of the transition.
01/10/2010
The media company has projected a three-week period of volatility post-transition before costs begin to settle.
Once the market stabilises by early next year, the prices will rise 13 per cent higher for unbranded and 23 per cent higher for branded keywords over current Bing.com pricing, the report added.
“Any time you interject change into the auction you invite pricing pressure,” said Chris Copeland, chief executive officer of GroupM Search. “In this case, we see historical evidence that suggests regardless of the bid tools and the preparation, a period of short-term volatility will exist.”
The study was completed by GroupM Search’s Predictive Insights unit, a team comprised of econometric statisticians and mathematicians with expertise cultivated in the area of search marketing.
GroupM Search looked at current and historical paid search campaign data to estimate cost implications and how long it will take advertisers to return to equilibrium after this shock to the market. The study included campaign data of 12 market-leading clients who have maintained a steady presence on both Yahoo and Microsoft’s search networks dating back to 2007.
The insights from this study are important for advertisers because it allows advanced preparation for what to expect from this transition.
“If three-week volatility and CPC increases can be countered through better understanding of competitive sets, sophistication of those advertisers and what strategies they use today, then this research will have served our client base well,” said Copeland.
One of the most important insights from the study is the understanding of the number of advertisers with paid search campaigns unique to Yahoo that potentially will now be running on the Microsoft adCenter platform. Within the search marketing campaigns analyzed, on average only 27 percent of the advertisers’ competition for branded and unbranded keywords were running on both Yahoo and Bing. GroupM Search projects that advertisers unique to Yahoo moving to adCenter could lead to a 74-percent increase in competition levels on Bing than exist at present.
This increased competition will be the greatest factor for the amplification in paid search costs, the study revealed. In a pay-per-click auction system, such as paid search, the number of competitors matters
greatly in the final price of the item because each competitor vies for its desired position.
“The industry has long known the variances of performance between Yahoo and Bing. What we found and what we believe has the biggest material impact for advertisers are the vastly different competitive sets between the two,” said Copeland. “When you put such a large set of new advertisers of varying sophistication into the mix, you are going to see a less stable CPC marketplace.”
On the heels of the Yahoo and Microsoft Search Alliance transition, however, comes the peak of the holiday season when paid search sees its greatest surge in advertisers and CPCs. With this unique timing, the marketplace could experience bidding variables it hasn’t seen before and it could be early 2011 before everything settles and the “new CPC” is realized.
Copeland added, “It is essential for all parties to get this right and we support the decision to go forward ahead of the 2010 holiday season. However, this predicted fluctuation, combined with holiday bidding strategies, means it could be three to four months before the new normal is set.”
An abstract detailing the study can be downloaded from the GroupM Search Blog, SearchFuel.
Source: www.groupm.com/
