Keyword Price DipReveals Seasonal and Industry-Specific Volatility

Keyword prices dropped an average of 3 percent in January after the end of the 2004 holiday shopping season, but prices in certain vertical categories fluctuated even more dramatically. That’s according to search engine marketing (SEM) firm Fathom Online’s study of keyword pricing in nine industries.

“There’s definitely seasonal pricing changes reflected in the January numbers,” said Matt McMahon, EVP of Fathom Online. “What we’re finding, though, is that it’s not wholly informative to look at just the increase or decrease of keywords across the board over a given period of time. There’s a lot of pricing volatility that happens by industry, sometimes on a day-to-day basis.”

For example, of the nine keyword categories tracked by Fathom’s analysis, wireless/telecom dropped the most precipitously in January, plummeting 28 percent compared to December. Fathom attributed that drop to the trend of giving cell phones as gifts in response to holiday season promotions.

Other holiday-related drops include a 9 percent decline in consumer retail keyword prices and an 11 percent drop in the consumer travel category in January after upticks as high as 78 percent month over month beginning in October.

Though consumer categories posted significant drops in the month after the holidays, other category prices held relatively stable and even increased. The finance/mortgage category showed a slight uptick of 3 percent in January, its fourth consecutive monthly increase. Since September, the category has increased a total of 55 percent, growing from $3.17 a keyword to $4.93 in January.

Fathom attributes that surge to mortgage companies seizing on mortgage rate declines over the last six months, convincing homeowners and first-time buyers to refinance or purchase real estate.

“What’s of interest to marketers is how to home in on the micro as well as the macro trends that appear to drive keyword pricing,” McMahon said. “For example, we are expecting shorter bursts of activity leading up to the Valentine’s Day and Mother’s Day holidays that informed marketers will leverage to maximize the use of their online budgets.”

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