STATS: Google Becoming More Efficient: Improved CTR

Google Becoming More Efficient: Improved CTR

The recently reported decline in Google paid clicks caused what may be an unnecessarily strong reaction in the investment community this past week. Efficient Frontier's US Client Index, which covers more than 20 million paid clicks each month, did indeed see a 5% drop in click volume on Google when comparing January 2008 to January 2007. But same advertiser spend was up on Google by 7% in the same period, and click through rates improved by 10%. CPCs were up by 13%. This data suggests, as Comscore posited, that Google is becoming more efficient at serving ads by delivering more relevant clicks to advertisers. Thus it is able to charge a higher premium for those ads, hence the increase in CPCs.

Our Search Engine Performance Report: Q4 2007 showed that ROI on Google was up 7.5% from Q4 2006 to Q4 07, which does not spell disaster in my mind. Next week we'll take a look at overall statistics for February on this blog. Stay tuned!

Ed: Google turned off area-click in Nov-07. Was it timed with a new targeting change in Sep/Oct that improved CTR? Or reduced impressions on non-optimized affiliate content pages?

ComScore clarifies view on Google 'paid click' data

By John Letzing & Benjamin Pimentel, MarketWatch

"It is common knowledge in this industry that Google has been targeting what it deems to be low-quality ads," the ComScore executives wrote. "It has introduced a 'quality score' that it uses to prioritize placement of ads or to decide to suppress an ad altogether." 

Content Spending: How much is enough?

The average Efficient Frontier client spends 3.4% of search budget on content, but that number varies widely by vertical. Because Efficient Frontier's portfolio optimization algorithms look at the entire portfolio of keyword bids across both search and content, where spend is allocated is an indication of the effectiveness of that channel.

To learn about best practices for content advertising, read this post.

February 21, 2008

Average CPC - Search vs. Content

Last week Search Engine Watch posted Efficient Frontier's average CPC by vertical for search advertising. I've been asked to compare that data to content advertising. Our average CPC across all clients in January 2008 was $0.65, while for content it was about half, at $0.32.