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Tablet CPCs on Par with Desktop after Enhanced Campaigns

Now that advertisers have been opted into Enhanced Campaigns for over a month [1], we took a closer look at the effect on CPCs, and specifically the impact on tablets and smartphones.

In our quarterly Trends in Paid Search Report [2], one of the key metrics we analyze is the “CPC Discount from Desktop”.  This is essentially the difference in average CPC for each device segment over a specific period of time.  Historically, advertisers have enjoyed a relatively large discount from desktop on both smartphones and tablets.  This discount was partly the result of less advertiser competition and partly the result of their reluctance to increase bids on these devices where conversion rate was lower than desktop computers.

With enhanced campaigns, however, advertisers can no longer separate out their tablet campaigns from desktop.  And smartphone bidding is managed through bid modifiers. When Google first announced the mandatory switch to enhanced campaigns, our experts predicted that advertisers would pay more per click on smartphones and tablets [3] .  And now that advertisers cannot separate their bids for tablets and desktops, we would expect the CPCs for desktop and tablet to converge. But as my colleague Matt Grebow pointed out, “Even though enhanced campaigns combine bidding for desktops and tablets, keywords and ads for each device still maintain separate quality scores. [4]

So we should expect tablet and desktop CPCs to move closer to lockstep, but these device-specific quality scores could yield some difference in average CPC.

And when we look at our average CPC discounts for the past few months, this is exactly what we found.  For this analysis, we looked at CPC discounts for all clients included in our Q2 Trends in Paid Search Report.  Comparing the 30 days after the July 22 enhanced campaigns deadline (7/22/2013 – 8/21/2013) to the 30 days prior (Month-over-month), as well as compared to the same 30 days in 2012 (year-over-year), we find declining CPC discounts on both tablets and smartphones:

CPCs on Par with Desktop 1 [5]

In this July/August time period in 2012, CPCs on both tablets and smartphones were running at a 14-15% discount from desktops.   11 months later, that discount had dropped to 4.1% on tablets, and 11.3% on smartphones.  1 year later – the 30 days after the enhanced campaigns deadline — the CPC discount on tablets had fallen to 1.2%, while smartphone CPC discount only fell to 9.5%.

In the first month after the mandated switch to enhanced campaigns, tablet CPCs seem to be increasing faster than smartphones.   As we predicted, CPCs on tablets are moving closer to desktops, but device-specific quality scores still afford advertisers a small discount.  CPCs on smartphones are also moving closer to desktops, but a healthier discount still remains. We’ll have more results to share on the impact of enhanced campaigns in our Q3 Trends in Paid Search Report, due out in early October.  In the meantime, leave a comment and let us know what types of results you are seeing with your campaigns.

About Alec Green

Alec serves as Mother Hen of The Search Agents, making sure contributors mind their P's and Q's and never write the seven words you can't say on television. He's been called a "social media hater" who longs for the days of door-to-door selling and advertising in the phone book.