Paid search keyword prices raise 2% in Q4

The price of paid search keywords rose slightly in Q4, 2006 to $1.51, according to a report from Fathom Online. The increase in price indicates a growing interest in paid search advertising.

by Kristina Knight

Year over year, keyword costs showed a 4% growth.

In 2006, Q3 showed the greatest increase in keyword price at more than 16% growth. Overall, the keyword price is up more than 18% from Q2, 2006, when the average cost was $1.27.

“The quality of the keyword buy – its effectiveness in drawing the interest of end users – is clearly rising in importance," said Dean DeBiase, chairman and CEO of Fathom Online. "The good news is that, despite the long-term upward trend of keyword prices, advertisers can mitigate the price increases by managing their Search Marketing initiatives more aggressively through technology and analytics. The ability to monitor, measure and adjust is more important than ever to improve return on investment.”

The relatively slow growth of keyword price in Q4 is likely because more advertisers buy keywords for holiday campaigns toward the end of Q3, according to the report. Also, because advertisers are becoming more selective in their keywords, price will likely continue at a slow and steady pace rather than huge increases each quarter.