The Up-Tick of the Click: Putting the Rise of Cost Per Click into Perspective

 


Jun 19 06:31 pm
Written by: Erin Ramsay

 

It’s not surprising that digital media, as a percentage of total media consumption, officially surpassed TV in 2013. You can’t go anywhere without being surrounded by folks staring at a screen or tuned into their ear buds. We now travel unfettered by any previous Internet restrictions such as building walls or Internet cables, freed by the prevalence of wireless networks and Bluetooth connectivity.

These new patterns continue to gain traction, making not just a digital strategy, but also a mobile digital strategy more important than ever when it comes to marketing.

In 2014, US adults spent 47 percent of their total media consumption time on digital devices. When you drill down even further into this stat, it becomes apparent that the shift is being driven by mobile. Of the 47 percent of time spent on digital devices, 23 percent was spent on mobile devices.[1]

Despite the stats revealing staggering mobile growth, there has historically been a disparity between the amount of time spent on mobile and tablet devices, and the amount of funds allocated to these mediums. Traditional ad spend still dominates the advertising portfolio but industry analysts expect this gap to start to narrow as ads become more optimized for mobile and tablet screens. According to the latest research, analysts predict that US digital advertising spend will overtake TV in 2016[2] and mobile ad spend will grow by a compounded annual growth rate of 43 percent by 2018, reaching $42 billion.[3]

Automotive Mobile and Advertising Trends

The monthly trends generated in the automotive industry are just starting to follow suit as savvy automotive marketers strive never to be behind the Eight-ball. According to the advertising trends observed across Dealer.com’s leading market share, mobile ad spend has increased by 22 percent comparing April 2015 to April 2014.[4]

 

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Observed digital activity is following this shift in spending patterns: advertising clicks on mobile and tablet devices outpaced those on desktop as a percentage of total in December 2014. Even though this is a recent shift, the observation is continuing through 2015.[4]

 

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More Digital Means Higher Cost Per Click

The result of so much focus on digital advertising has been a rise in Cost Per Click (CPC). As more businesses enter the digital advertising space, which is driven by bidding algorithms, competition is going to increase the price paid for clicks. Year over year, the percentage of clicks and spend that comes from mobile devices has grown, but so has CPC. There is, for example, a 157 percent increase in CPC comparing January 2012 to January 2015.[4]

 

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Another factor is the change in campaign management, driven by the usage of mobile and tablet devices in addition to desktop. To simplify campaign management across multiple devices, Google introduced Enhanced Campaigns in 2013. Enhanced Campaigns allow advertisers to tailor ads to user context and device. It is important to note, however, that Enhanced Campaigns also tie tablet and desktop bids together, eliminating the possibility to bid separately on tablet traffic. In addition, Enhanced Campaigns automatically opt-in smartphone traffic, a default setting.[5] These caveats are thought to bear some of the responsibility in bringing mobile and tablet click costs up in line with those of desktop.

The Bigger Picture of the Digital Evolution

The web is a dynamic place, and it continues to evolve. This is a good example of why global data trends, awareness, and industry developments are important to a dealership. This knowledge can provide context to seemingly damaging trends such as rising CPCs.

The story of digital marketing continues to be written. Novel advertising concepts such as ‘Meta DSP’ models, working with multiple programmatic partners, native advertising, and sponsored content are all entering the digital advertising space, molding it into what we will observe through data trends in 2015 and beyond.

 

Erin Ramsay is Senior Manager, Product Analytics at Dealer.com

 

1 http://www.emarketer.com/Article/Mobile-Continues-Steal-Share-of-US-Adults-Daily-Time-Spent-with-Media/1010782

2 http://adage.com/article/media/digital-overtake-tv-ad-spending-years-forrester/295694/

3 http://www.businessinsider.com/mobile-is-growing-faster-than-all-other-ad-formats-2014-10

4 Dealer.com’s proprietary AdWords network data

5 http://searchengineland.com/the-big-adwords-update-enhanced-campaigns-puts-the-focus-on-mobile-147626

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