Branded Keyword CPCs Continue to Rise in 2019

Do you measure paid search media success by Return on Ad Spend (ROAS)? Then you should know that any increase in cost-per-click on paid search for your most qualified keywords can have a detrimental impact on this key performance indicator. The battle against the rising paid search cost-per-click is an ongoing war. At GCommerce we are constantly optimizing our account structure, bids, targeting, ad copy and more in an attempt to garner better quality scores and obtain a lower cost-per-click. Why? Because every dollar of media spend matters when trying to drive optimal revenue and return for our clients.

No matter how much we fight, over the years we’ve continued to see increases in CPCs for our clients’ paid search campaigns. When we came across Merkle’s recent Q1-2019 Digital Marketing Report it verified our internal research that across industries other advertisers were experiencing similar results.

Merkle reports that as recently as Q4 2018, paid search CPCs for Branded keywords were up 18% YOY. This was a continued spike in CPCs YOY that started back in Q4 2017.  That’s 5 straight quarters of double digit increases according to Merkle. Yikes. Luckily in Q1 2019, cost-per-click growth slowed and was only up 6% YOY.

It’s hard to reason with a 6% increase seeming low. We know every marketing dollar needs to go further. Every increase in cost-per-click results in less clicks that can drive converting traffic to your hotel’s website. This requires you to either increase budgets to gain the same traffic as previously, or to try and capture traffic from other sources at a lower cost of acquisition.

We dove into GCommerce’s own data for the same time periods and found the following:

• Q4 2018: GCommerce clients only saw an average increase of 5.78% for branded keyword CPCs compared to 18% YOY increase reported by Merkle
• Q1 2019: GCommerce clients’ branded keyword CPCs only increased by 4.14% vs 6% YOY increase reported by Merkle

Our own research, along with the supporting data from Merkle, seem to show that Google is employing tactics that are raising CPCs outside of normal factors that we have seen in the past. Generally, we see increases in Brand CPC tied closest to competitors increasing their bids and spend for those same keywords. However, GCommerce Data nor Merkle Data are reporting significant changes in competitor spend that would result in these types of increases to Brand CPC.

While there are many tests, experiments and tactics we employ to fight CPCs and drive more qualified traffic to drive conversions, there are outside factors that can drive up CPCs further.  The most common being competition from OTAs. While OTAs are important partners to sell inventory quickly during need periods and offer exposure to new potential guests, these same partners bid heavily on your hotel’s branded keyword terms. What makes this even harder in the battle for direct conversions is that OTAs have large advertising budgets, allowing them to absorb higher CPCs and unexpected changes from Google compared to a small, independent hotel.

Have questions about how we can help you fight higher paid search CPCs and drive more qualified traffic to your hotel’s website? Reach out to GCommerce today.