After taking a huge 16.5% leap in the third quarter 2006, the average prices for keyword advertising leveled off, rising only 2% in the fourth, according to Fathom Online’s Keyword Price Index.
“Continued strong demand from advertisers increased keyword prices in the fourth quarter of 2006, but the rise was much smaller than in the third quarter,” said Fathom CEO Dean DeBiase in a statement. “The traditional spending slowdown at the end of December and the growing importance of ad quality and placement accounted for the smaller increase compared to third quarter of 2006.”
DeBiase also added that the jump in the third quarter was due to the increase in keyword sales in anticipation of the holiday shopping season, and that that momentum tapered off after holiday shipping deadlines passed, driving keyword prices down by the end of December.
He encourages advertisers to focus on ad quality rather than keyword price and make use of analytics and search marketing management technology. “The quarter again showed why price doesn’t always win.”