In a sign that
have gotten off to a strong start in the search business, the prices that advertisers paid for keywords used in Internet searches rose 11% in April from March, the biggest month-over-month gain since last October.
The figures -- compiled by Fathom Online, which tracked 500 terms in eight categories -- show that average prices paid on search keywords rose to $1.95 in April from $1.75 in March. That's more than double the 5.4% average monthly growth rate that keyword prices have seen since the company began tracking the data last September.
Google and Yahoo! allow advertisers to bid on specific terms so that their ads will appear in sponsored-link advertisements when someone types an identical or similar term into a search engine. Many search-engine users have trouble distinguishing the ads from the natural search results that the engine delivers, and click on them, hoping to find what they're searching for.
No major search company releases information about the prices paid by advertisers who win the automated bidding processes. Investors in Google and Yahoo! are hungry for any trends that could give early insight into how the prices are faring, with many conducting their own informal surveys of advertisers to sniff out new trends in search ads.
While the April numbers are encouraging, they only represent part of the picture. Fathom's numbers show that keyword prices slumped in January and February, falling 6% on average to $1.60. But when Google and Yahoo! announced their first-quarter earnings, both indicated that the dip in prices was more than offset by a surge in new terms that advertisers were bidding on as they sought out underused keywords.
The average price figure can also conceal what can be starkly different pricing trends within different industries. Keyword prices for terms related to mortgages and broadband have risen 37% and 31%, respectively, over the past six months, while terms related to consumer retail and wireless have dropped 13% and 7%, respectively.
In April, keywords in the mortgage category fetched the highest prices, averaging $6.49 per term, while consumer retail terms had the lowest bids, averaging 52 cents.
Google's stock closed down $2.57, or 1.1%, at $228.72, while Yahoo! fell 17 cents, or 0.5%, to $34.71.