Online Search Prices Rising In Q4, Say Search Advertisers

CPCs were up 20%-plus for search advertising during October, according to a number of accounts. 

  • About half the uptick is due to seasonal spending around the holidays with the other half being a general recovery in pricing.
  • Still no signs of a wholesale price recovery across the board, though initial signs are at least moving in the right direction (modestly encouraging).

2010 BUDGETS ARE INCREASING

2010 budgets for search marketers are increasing, which is a stark contrast to last year at this time when budgets were being cut across the board.  However, while clients are telling agencies they are allocating more dollars to next year’s budgets they are asking them not to commit the spending yet.

This isn’t as positive as committed budgets, but certainly better than lower budgets. 

LARGER CITIES ARE SEEING RATE INCREASES BUT SMALLER MARKETS LAG

A few agencies said they were seeing rate increases in large markets, but hadn’t seen similar movement from smaller markets since they tend to lag large cities in a recovery.  Most were waiting for movement to be seen from smaller markets before coming to the conclusion that a wholesale recovery had begun.

We should note that we saw similar movements from the larger markets when we recently spoke with some of the leading display exchanges, which would further support the belief that we’re seeing the first signs of a move toward growth in online advertising.

GOOGLE HAS RECENTLY BEEN INCREASING ITS MINIMUM BID PRICES

Beginning in Q209, Google has gradually been increasing its minimum bid price through the current Q4.  This likely has had an upward ripple effect on overall CPC pricing.  In addition, the fact that the gradual increases have stuck is further evidence of tightening demand in search.

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