Keyword bid prices down on Thanksgiving

December 7, 2004

Consumers were shopping a lot over Thanksgiving weekend, but search marketers were shopping a lot less.

A drop in demand drove the cost of buying keywords down 3.6 percent during what is normally considered one of the most important holiday shopping weekends of the year, according to search marketing agency Fathom Online, which this morning will release its Keyword Price Index (KPI) for November.

Matthew McMahon, Fathom Online's executive vice president of media and marketing, attributed the surprising decrease to the "adolescence" of the search market.

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"This is a strong indication that many advertisers may have set static bids on their campaigns over the weekend, and were not able to take advantage of the increased demand." McMahon opined that these advertisers set their bids on Wednesday and didn't check them again until Monday.

This year's online Thanksgiving weekend sales were record-setting, according to comScore Networks. Consumers spent $133 million on Thanksgiving Thursday--a 100 percent year-over-year increase-- $250 million on so-called Black Friday, and a whopping $391 million on Black Monday.

On Black Monday, McMahon noted that there was immediately an 18 percent spike in retail keyword prices "as advertisers returned from the break and realized there was more demand to be captured."

Since the end of October, the cost of buying keywords has risen 7 percent across all consumer categories, according to the November KPI. On average, advertisers paid $1.66 per keyword in November, a 21 percent overall increase since Fathom started measuring the KPI in September.

The consumer services and retail categories were mostly responsible for the November price increases. Retailers paid $0.60 on average per keyword last month, a 25 percent increase over October's average of $0.48. The average cost for keywords pertaining to consumer services rose 32 percent this month, from $0.96 to $1.27.

However, Consumer services is a broad category that includes health, dating, legal services, education, entertainment, media, and many other services that all command different lead values--which most likely translates to different keyword values--from advertisers.

Nevertheless, on average, advertisers are paying 135 percent more for keywords in this category than they did in September. Retailers are paying a combined 88 percent more per keyword than they did in September.

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McMahon said these price increases in the months leading up to the big holiday spending season are not all that surprising, given that consumer demand for these products and services also increases.

He said advertisers should expect the price of keywords to continue to go up through the middle of December, and drop off once holiday spending tapers off.

The only two categories that received keyword price decreases in November were automotive (down 3 percent) and telecom broadband (down 11 percent).

Source: MediaPost

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