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Is the era of bargain-priced mobile paid search nearing the end?

With the deadline for marketers to switch over to Google Enhanced Campaigns coming up on July 22, marketers could see the cost-per-click rates for tablet paid search reaching parity with desktop. Smartphone CPC rates could also increase, but probably not by as much.

Mobile paid search has been a bargain for savvy marketers who jumped in early, thanks to a dearth of competition and the fact that the spend here is relatively low compared to the adoption levels. However, the cut-rate prices are already starting to increase, not because Enhanced Campaigns are inherently more expensive but because they are bringing more competition into the category.

?Because Google is lowering the barrier to entry to play on multiple devices with Enhanced Campaigns, what advertisers are going to see is increased CPCs based on increased competition,? said Jeremy Hull, associate director of paid search at iProspect, Boston. ?Advertisers that have been in the space for a while are probably going to experience the most volatility.

?We are predicting that by the end of June, most advertisers that have been historically advertising on tablets will see pretty decent CPC increases,? he said.

?We?re anticipating smartphone CPC increases but not as drastic as on tablet because while competition will increase it will not be at parity with desktop because some advertisers are going to opt out.?

Smartphone ready
Tablet CPCs are going to increase because under Enhanced Campaigns, tablets and desktop are treated the same and competition will increase.

IProspect predicts that for marketers who are currently seeing CPCs on tablets lower than on desktop, they should plan for CPCs to become equal or slightly below desktop by the end of June.

However, marketers will automatically be opted in to delivering their campaigns on smartphones and will have to take the step of opting-out if they do not want to be there. This means many marketers who may not understand Enhanced Campaigns could have their ads appearing on smartphones without being aware of it.

Increasing competition
With mobile CPC rates going up because more marketers are going to be playing in the tablet and smartphone paid search space, this means the overall spend on mobile paid search is likely to get a significant boost from Enhanced Campaigns.

?Just flipping the switch on Enhanced Campaigns does not significantly increase your CPC,? Mr. Hull said. ?It is a different targeting setting, but still for the most part speaking to the same audience and you can replicate past strategies for the most part.

?What we found is that migrating doesn?t increase your CPC,? he said. ?What has caused the increases we?ve seen is when your industry as a whole, your competitive set, migrates to Enhanced Campaigns and there is more competition.?

From Google?s perspective, it is restructuring the AdWords framework with Enhanced Campaigns to make it easier to accommodate any new devices that might come along and grab the consumer?s attention.

Simpler campaign management
The problem has been that best practices for paid search dictate that marketers clone their desktop campaigns and run separate campaigns on tablet and desktop, in effect tripling the number of campaigns they are managing.

Enhanced Campaigns attempts to eliminate this issue by automatically running a single campaign across multiple devices, enabling marketers to reach consumers across a variety of devices without having to create cloned campaigns.

There was a significant uproar from marketers when Enhanced Campaigns were first introduced a few months ago because the strategy eliminates the ability to target campaigns by device, something many feel puts smartphone efforts a distinct disadvantage since the use case is so different compared to desktop and tablets.

However, this is dying down as marketers gain some experience with Enhanced Campaigns and because Google has made some adjustments to address a few of the concerns,

?We have actually been in the process of converting all of our campaigns to Enhanced Campaigns,? said Jacob Beckley, vice president of innovation at digital agency Fusion92, Arlington Heights, IL.

?We are able to enhance and optimize the ads on a per device basis,? he said. ?This has allowed us to understand, analyze and adjust our cost per click on an individual device basis, making campaigns much more effective and relevant.

?We see this migration as a great opportunity to spend our budgets wiser and get our clients more results. Currently, we have not encountered any obstacles with the migration, both the interface and the platform are very similar to the previous and seemingly intuitive.?

Mobile targeting
In the period since Enhanced Campaigns were introduced, Google has attempted to address some of the concerns around mobile targeting.

For example, it made an adjustment to allow bid modifiers to be set more granularly. Whereas originally, bid modifiers could only be set at the campaign level, Google has added the option to be able to set mobile bid adjustment at the ad group level.

This means that for a campaign with two keywords, both of which perform well on desktop but only one performs well on mobile, the marketer does not need to create two separate campaigns.

However, there are still a couple of areas where mobile targeting for Enhanced Campaigns is still lacking compared to before. One is in budget allocation, with marketers no longer able to allocate more of their budget to smartphones by putting cap on desktop campaigns and running the smartphone campaign without a cap.

The other area that is lacking is for advertisers that are promoting apps. Previously, these ads could be targeted by device and operating system. Now, the ad copy can only be customized by device and not by operating system.

Google has tried to address this by updating how app extensions work via an ad extension that syncs on the backend so the proper version of an app is displayed to a user based on his or her device.

Since this is handled on the back-end, it is not something that advertisers cannot control.

Marketers move cautiously
These adjustments notwithstanding, marketers are still proceeding cautiously into Enhanced Campaigns.

?A lot of sophisticated marketers are moving slowly with Enhanced Campaigns, switching over at a measured pace and running fairly conservative budgets,? said Roger Barnette, president at IgnitionOne, New York.

?We definitely have clients already on board, but they're still very much in a learning phase,? he said. ?Results have been largely positive so far, but many clients are still waiting to see how the marketplace will react at scale.

?It's giving many of them a no-excuses reason to really embrace mobile search, something they may have let lag for some time. But it's also a challenge in that it's something they need to get right, which takes time and resources.?

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York