The holiday shopping season is the single most important stretch of sales for many retailers in the U.S. As such, brands tend to get a lot more aggressive in marketing channels, including paid search.
Naturally this increase in competition has an effect on the bids required to appear in paid search results, whether at the top of the results or on the first page at all. But how expensive does it get?
Using Google’s first page and top of page minimum bid estimates, we can get an idea of how pricey reaching these locations in the search results can get during the holidays for the average keyword. Surprisingly, it’s not as big of a jump as you might expect.
First Page and Top of Page Minimum Bid Estimates Rise in Late November
Google provides advertisers with estimates of how high a keyword’s bid needs to be in order to reach the first page of search results and to appear above the organic results at the top of the first page. These estimates can shift for a given keyword as a result of changes in the level of competition, changes to the layout of the SERP which impact the number of available ad slots, as well as when Google makes backend changes, such as its ad rank calculation change in May of this year.
Taking a look at the 2016 holiday season, we find non-brand first page minimum bid estimates began picking up right around Thanksgiving, while brand first page minimum bid estimates actually trended a bit down during the holidays relative to mid-November. The red and orange lines denote Thanksgiving Day and Cyber Monday, respectively.
Non-brand estimates fell back below mid-November levels just before Christmas and continued to decline heading into the New Year.
Now again, these estimates can shift as a result of a few different types of changes, but in this case we believe it is primarily the result of increased competition during the holidays, both in the form of higher bids from existing advertisers and additional brands entering the space during this time.
Google Auction Insights reports, which detail which competitors are showing up in the same auctions as an advertiser and how often, corroborate this assumption. The average number of competitor sites included in Auction Insights increased last year beginning on Thanksgiving, and fell below levels observed in mid-November just ahead of Christmas Day.
Still, average first minimum bids topped out at just about 10% higher than mid-November levels last holiday season. That actually seems relatively tame considering how aggressively most advertisers adjust bids during this time.
Further, while non-brand top of page bid estimates also increased right around Thanksgiving, they topped out at about 5% higher than mid-November levels, and also weren’t as consistently higher throughout the holiday season.
This might mean that most of the influx of competition comes in the form of advertisers that aren’t deep-pocketed enough to really challenge for top spots, resulting in more pressure at the bottom of the page than at the top. It could also be the result of noisy data that should really just be taken directionally, but if the holidays aren’t a good time to draw way too specific conclusions about different data points then I don’t know when is.
Regardless, average cost-per-click trends fairly similarly to the waxing and waning of first page minimum bid estimates.
The one day in which CPC increases truly far outpaced the shifts in first page and top of page minimum bid estimates was Cyber Monday, naturally a big day for most online retailers and thus cause for aggressive competition.
Conclusion
Paid search competition is set to heat up significantly in the coming weeks, making it more expensive for advertisers to get ads on the first page and/or the top of page search results. In order to maintain visibility, most brands will have to deploy timely bid pushes in order to hold their position in paid search results.
Looking at Google’s own first page and top of page minimum bid estimates, the shifts in competition might seem only modest. However, brands will certainly have to push bids more than 10% in order to remain competitive for some keywords, and should keep an eye on metrics like impression share and average position during the holidays to ensure they’re not slipping off the first page entirely.
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