January 7, 2015
If you are new to PPC or a veteran you know that projections are part of the game. It only makes sense to make predictions on what will happen with the PPC market as we enter a new year. To make conclusions and predictions about where the market will be heading we look to The State of Paid Search survey.
Going into a new year, account managers draw conclusions from the previous year to determine the best approach for budgeting. When it comes to overall PPC budgets it is predicted that there will be growth but it will be at a slower pace than last year. In the survey, 10% of respondents said they planned to increase their budget in 2015. That is a large decrease compared to the 73% of respondents who said they planned to increase their budget in 2014. However, 10% does still mean growth. So, why is it that budgets will or will not increase?
The following could be factors in determining whether or not budgets are increased:
- Distribution across various platforms
- CPC (cost-per-click)
Distribution Across Various Platforms
As more and more platforms begin to grow in popularity and their ability to advertise, PPC has even more opportunity to grow. With this growth comes the ability to increase budgets. Advertisers have the option to distribute budget differently among platforms or increase budget to accommodate new platforms. By increasing budget, current platforms that are being used will be able to maintain performance and will not be affected by the addition of a new platform.
On the other hand, if current platforms are not performing well adding a new platform allows for advertisers to distribute budget differently. A huge factor in PPC budget growth comes from the increase in advertising that social media platforms are implementing. Last week’s post talks more about the role social networks will have in the future of PPC.
A second factor in the decision to not increase budget could be traffic. If a decrease in traffic was seen then pulling back on budget or leaving it alone and distributing it differently may be why some advertisers don’t plan to increase. On the other hand if there was an increase in traffic but conversions just were not there then increasing budget may not make sense at the moment.
Download the entire 2014-2015 State of Paid Search right now!
This could swing either way. When it comes to budgeting, competition could push for growth in budget if performance is good but more budget is needed to maintain that performance. At the same time it could hurt. Increasing budget may not be an option when performance is lacking.
Another factor that may play a role in why fewer advertisers are planning to increase their budget may involve increase in CPC (cost-per-click). For example, if your average CPC is rising but conversions are not then it may not be affordable to increase your budget. An account’s budget can only be increased so much and still be profitable. On the other hand if CPC were decreasing then increasing budget would be an option as long as conversions are still being generated.
Last but not least is the opportunity for automation. The more settings, rules and requirements that need to be monitored means there is more room for error. To minimize error it makes sense to implement budget automation and at the same time it will save you time and headache. For more on budget automation check out Jeff Baum’s post 2015 Prediction: The Year of Bid and Budget Automation.
Overall, there will be growth in the market. It will be at a slower pace than last year but will follow an upward trend.