Following the AdWords Money Trail: A Data Analysis

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AdWords Money Trail: A Data Analysis

There is an abundance of pieces written about uber expensive Google AdWords phrases: the top 10 or 100 most expensive, for example. However, little to no data analysis looks at a more significant sample size where an advertiser spends a bit more than a Friday night dinner for two for a click.

Where I live, a nice dinner out for two would be $50. How does a dinner versus a click of the mouse from a stranger stack up for you? How’d you like to own a small business in a very highly competitive industry and run your own AdWords campaigns? Would each AdWords bid make you wince?

I analyzed the roughly 27,600 dinner-for-two-keywords– and those with higher costs– based on SEMrush data (where I work and oversee their major accounts).* Spends on these phrases are breathtaking, and it’s easy to dismiss their value. But,the high prices also demonstrate the heights of market efficiency we’ve reached with online advertising (more about suggested and average bid prices at: Understanding Your Keyword Planner Statistics and Traffic Forecasts).

Keyword              CPC*                 Competition**           Search Volume***

Sum                                                                                                    6,028,840

Median                 $64.11                      .95                                           50

Average               $73.81                      .82                                           216.11

Sum of Search Volume, Central to Our Story

An important note about the universe from which this sample was pulled: they come from the top 40 million keywords by monthly search volume which SEMrush tracks. That means very long tail phrases, those with about four or less searches, are not considered for this analysis. The AdWords phrases from our sample combined represent about 6 million searches per month. For perspective, Google Keyword Planner tells us there are 6.1 million searches a month for “usps,” 5 million for “hulu” and 124 million for “porn.” The volume here is not high by many measures, but the revenue for Google is hundreds of times higher than from typical AdWords clicks.

Average CPC: What It Costs To Buy a Click for a Crazy-Mad-Expensive Keyword Phrase

If the bottom of our most expensive words is dinner-for-two, the average is a party: $73 should allow for the cost of dinner for three. Or, buy about five six-packs of the famed Dogfish 60 Minute IPA with some change left over. Ever consider purchasing Dr. Pepper online? Do a quick search and find that for no less than $75 you can buy nineteen six-packs.

Here are some of the AdWords clicks you can buy for this average $73 cost in our set of most expensive.

1. Does one click on “auto insurance quotes Texas” strike your fancy?
2. How about “Chicago skyline vector”?
3. The jet set might have a click on “plumber Beverly hills”

It’s easy to joke about the costs, but on a serious note, our plumber or vector creator might make a pretty profit on these clicks if he or she has significant experience with paid media. Perhaps the reason we have a willingness to put out so much money for PPC is because the landing pages and conversion methods are so well executed that the ROI is easy to justify.

Some of the most expensive words from Google Keyword Planner include “truck accident attorney los angeles” for $484.90 and “structured settlement buyers” at $476.67. We can speculate the “value” of the CPC fluctuates widely here. Settling a truck accident would easily pull a fee over six figures. The sky’s the limit for structured settlements.

Competition

SEMrush defines this as “density of advertisers using the given ad for their ads. One (1) means the highest competition.”

Comparing Dominant Sectors With High Spends

average CPC by Sector

I expected to find larger numbers for sectors we often associate with the most expensive AdWords. All phrases that contained “head keywords” were grouped. The chosen head keywords chosen were one or two words that could adequately represent entire industries or sectors, such as “law” or “legal” to look at the legal sector. The three criteria used to identify sectors for analysis were:

  1. High competition for ranking
  2. High CPC in our sample data when searched on the head keyword alone
  3. Over 5,000 for search volume when the keyword phrases from the sample group were isolated.

search volume by sector

The third criteria was important. There are small niches which meet numbers one and two, but the goal was to find sectors we all have some experience with.

Insurance keyword phrases were searched far more than the others. With some very large outlier phrases — popular search terms — the average search volume for these was also higher than the others. “NYC” was included to see how much expensive Geo-locations would impact CPC. There were other Geo locations that would have met the above criteria, but NYC was chosen for its large economy among some of the most expensive locations in the US.

average search volume

High competition versus high CPC shows a reverse correlation with two sectors, but no for the group overall. MBA programs have fierce battles over clicks for phrases related to their sector, but the average CPC is the lowest of the group. There are more AdWords bids on phrases with “MBA,” but that does not translate to a willingness to pay the exorbitant prices associated with “law” or “legal” keywords. The latter has the least amount of competition in all our sectors, yet it has the highest cost per click.

average adwords competition

When we go to an offline auction, most items have a perceived value — not a commonly agreed on exact price or value. There is, however, a price that becomes accepted by a group as too high.

Perhaps those running the MBA programs have a different idea of what ROI should or actually is for conversions from AdWords. For attorneys, on the other hand, a smaller group compete, yet there are many areas of the legal sector where the group, relative to those buying MBA keywords, are happy to pay sky-high prices.  It is difficult to measure conversions from point of click to MBA enrollment or from click to new client to legal fee. However, smart PPC campaign managers will learn to work with their team to figure out what portion of student or client expenses can be “justified.”

Some sectors may be more reliant on paid digital advertising than others. Possible explanations include:

  1. Alternatives are more expensive relative to digital
  2. Professionals in the field embrace paid advertising more than their counterparts in other sectors
  3. SEO campaign managers and agencies prospect more heavily in some sectors than others

There is an issue with the methodology used here that accounts for discrepancies. Many terms do not use a head term with a sector name, and are in fact being searched by those in the sector. So, the word “trial” or “settlement” in the absence of “law” or “lawyer” will skew results. How how much they would skew is difficult to say.

One of the most interesting conclusions from comparing these sector averages is they do not actually reveal prices far above the overall average for our entire sample group of 27,600. Explaining this is speculative conjecture. One theory I have is when the big sector keyword phrases “define” part of what’s in a particular search phrase, they might predict the opposite of what defines some of the most expensive keyword phrases. It’s possible the highly niched nature of phrases in our sample is what make them expensive. Also, for many products or services or sectors there are at least a couple of terms that define a query with intent to make a very large purchase.

For example, there are types of equipment that show up in our sample. While many sectors are dominated by inexpensive products and services, the top of the line might be searched enough to be in the top 40 million searches needed to include a phrase for consideration for our sample. Services like “cloud security” account for a decent number of keyword phrases, but not enough to be shown with the “big sectors” I included.

Perhaps some keyword phrases are defined less by the “large sector” word appearing than by what the other words say. For example, “cloud phone systems for small business” has our “phone” head word. However, it is the other words in the phrase that define most of why this is an expensive purchase. “System” indicates a more large-scale purchase than something like a phone “plan.” At $296.09 CPC on Google Keyword Planner, with a search volume at 50 per month, it makes our list and is in the top one percentile of our 27,600, according to SEMrush data.

We know that a predictor of more sophisticated search, and one with precise intent, is keyword phrases with a large number of keywords in the phrase. In the above “phone systems” example, many people don’t know anything about phone “systems.” It’s the type of search an IT administrator with a big budget would make. Throwing in “small business” further clarifies a precise type of system. The term “buy phone” would not come from someone with a precise understanding of phone types.

If you made it this far, it’s no doubt time for you to eat. So, what’ll it be? Dining out or improving those conversions for clicks? I hope you’ll share your big-spender story in the comments or on Twitter.

 

*SEMrush CPC numbers are calculated from publicly available sources. There is a variance with what Google reports and SEMrush, but it is small: off by less than 10% overall when looking at large data-sets. Unless otherwise mentioned, CPC, Search Volume, and Competition data comes from SEMrush.
**Competition numbers in SEMrush come from “density of advertisers using the given ad for their ads. One (1) means the highest competition.”
***The average number of search queries per month in USA for a given keyword in the last 12 months. Data based on SEMrush algorithm.

Image Credits

Featured Image: Oleksiy Mark via Shutterstock
All images are from Microsoft Word

Eric Van Buskirk

Eric Van Buskirk

Freelance SEO and Content Strategy at ClickStream
Eric Van Buskirk is an SEO and content marketing independent consultant. In addition to general SEO and content marketing, his passion is big data analysis of domains, URLs, and content via Google search result pages. He now works with clients from his hometown, Philadelphia. He's a recent alum of SEMrush, where he oversaw major accounts. His digital media experience started in 1996 as a graduate student at BU College of Communications working on Barnes & Noble's first website.
Eric Van Buskirk
Eric Van Buskirk
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