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It is a well accepted truth that the cost of advertising on Adwords is going up. However we never knew the extent of it until we did further research. We can now show how big a problem Adwords cost inflation really is. The truth is, it is not that bad. Across 100 mixed keywords, we found that the cost of advertising on Google has increased by 4% in 8 months. We actually expected it to be a lot worse, as in the past we had figured that some of the most competitive keywords had leapt forwards in their costing.

This was still partly the case, as competitive keywords like “Sewer Plumbing” had increased by 24% in the last 8 months. It seems that as there are shifting trends online, the focus on advertising shifts accordingly. This even counts within certain industries, as we saw that Sewer Plumbing was one of the biggest increases, Plumbing Expert showed an equal drop of 24% in cost.

The most surprising thing we discovered, however, is that there are some interesting discrepencies between countries as well. Overall we found that, when adjusted for currency and competition, Australians are paying almost 24% more for their keywords than the UK, and 3% more than the US.

When you look at a keyword like accountants, we found that the competition is higher in the UK, but the cost per click is lower. This is a pattern we found across almost all the keywords. Of course there could be a range of reasons for that, including the fact that Australians are just more inclined to pay more for their advertising.

Not only is the UK the MOST competitive place to buy adwords, it is also the cheapest, go figure.

Like The Economist’s Big Mac Index, we thought we might create our own Adwords Index. The Big Mac PPP is the exchange rate that would mean hamburgers cost the same in America as abroad. Comparing actual exchange rates with PPPs indicates whether a currency is under- or overvalued. Based on this information you would say that the Australian Dollar is slightly over valued.

I am sure we will post more on this as we get more information, but it is enough food for thought now.


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