The Drum Awards Festival - Official Deadline

-d -h -min -sec

UK paid search CPCs overtake US for first time


By Jessica Davies, News Editor

April 8, 2013 | 5 min read

UK paid-search cost-per-clicks (CPCs) outstripped those in the US for the first time in the final quarter of 2012, according to research from Kenshoo exclusive to The Drum.

The report, conducted during the fourth quarter of 2012, spanned the Kenshoo platform comprising over 100 advertisers and totalling £1 billion’s worth of paid search spend globally.

UK search spend jumped 21 per cent from the third to fourth quarter, while the US saw spend climb even further with a 30 per cent rise, but Europe saw volume spend drop by four per cent.

CPCs in the UK rose by ten cents taking the total CPC to $0.48, overtaking the US CPC of $0.45 in the final quarter and dwarfing the rest of Europe which saw CPCs drop to $0.35 in the final quarter (see image below).

CPC by region

UK CPCs remained highest on desktop computers at an average £0.29, with smartphones seeing a £0.07 CPC rate and tablets a £0.23 CPC (see below image). Kenshoo has attributed the rises to increased competition in the market leading to a rise in overall paid search spend. However, it has also cited a “lack of mobile phone strategy” in the UK to be a contributing factor, with only 2 per cent of ad spend in the UK going to mobile phones, compared to over 5 per cent in the US. Kenshoo chief marketing officer Aaron Goldman believes the lack of established, standardised metrics for mobile devices are holding back spend on mobile with marketers struggling to define conversions. “We can’t expect a phone to deliver the same web-based conversion techniques therefore we must find other ways to define a conversion. Things like app downloads, time spent, pages visited, store locators, shareability – these are ways we should be using to measure the effectiveness of mobile.“Marketers don’t understand the value of the metrics and therefore don’t spend as much,” he said.

CPC by device

The results have triggered a mixed reaction among agencies. Starcom MediaVest associate director Paul Kasamias said although desktops are more expensive for advertisers than mobile devices they generate the highest ROI, which has meant traditionally more has been invested in desktop. "Despite this, our data also shows that overall query volume for desktop has fallen by up to 23 per cent year on year in some cases, with a dramatic increase in queries on both tablet and mobile devices - up to 226 per cent in some cases.""Because mobile devices in particular do not provide the ROI of desktop, advertisers continue to try and reap the rewards from desktop which provides them with the overall highest ROI. However, with the decline in query volume and an increase in competitors entering more auctions, this is leading to the inflation in desktop CPC's which advertisers are seeing across the board,” he said. MediaCom’s digital operations director Rob Weatherhead said the rise in CPCs shown in the Kenshoo data is not reflected in its own group data. It has seen a more gradual rise of 14 per cent year on year in average CPCs across its clients, rather than the 40 per cent shown in the Kenshoo data. He also agrees that the rise of mobile queries will have contributed to any recorded rise in CPCs, adding and this is "undoubtedly" one of the reasons for a move towards the new enhanced campaigns format by Google. "I can't comment on whether mobile has greater adoption in the US but in the UK we have certainly been controlled in our take-up of mobile PPC sometimes due to client constraints such as not having a mobile optimised presence, and at others due to taking a different approach to mobile campaigns by using fewer keywords. This will change with the roll out of enhanced campaigns and auto opt in to mobile." he said. The Search Agency has also seen UK CPCs rise yet also at a more gradual pace compared to that shown across the kenshoo platform. Deputy managing director Alex Campbell said it comes as no surprise that UK CPCs are eclipsing US counterparts, having identified similarities in its own data across the two markets.“What surprises me more is the rate at which the shift has occurred within this dataset, with such a steep uplift in UK CPCs across the second half of 2012. Our data suggests a more gradual trend, though at a micro level this is strongly impacted by both business vertical and geographic locality of campaigns,” he said. Agencies agree the effect of Google's Enhanced Campaignswill in time drive CPCs up higher although this is unlikely to show any significant change in figures until more campaigns have fully implemented it.


Industry insights

View all
Add your own content +