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Google AdWords Enhanced Campaigns – Constructive Move for Eco-System

June 26th, 2013

Google Enhanced Ad CampaignsThe Google AdWords Enhanced Campaigns (EC) advertising platform transition (to be completed by 7/22) remains an important update, gross profit growth acceleration and our multiple expansion thesis. While the full impact from Enhanced Campaigns is far from certain, we are encouraged by some early data points suggesting the platform transition does not appear to be disruptive, could be driving higher CPCs, and appears to be compelling advertisers to better optimize for mobile.

Analysts estimate a 1-2% incremental revenue uplift in 2H’13 and 2014 from higher tablet CPCs from Enhanced Campaigns (just from tablets; smart phones could present upside). Mobile smart phone CPCs could see a benefit if more advertisers participate.

Experience of Advertisers with AdWords Enhanced Campaign
Adobe Advertising Solutions reported its new findings and predictions for Enhanced Campaigns (EC), suggesting that EC drove Google’s total CPCs (cost-per-click) to up 6% from March to May (based on 100 major advertisers representing $100mn of ad spend). Adobe expects CPCs to increase 5-10% over the next two quarters.

iProspect reported that device level CPCs began increasing in mid-April and by May CPCs were 12% higher than the previous baseline (test was for 10 clients or $6mn of spend). iProspect expects tablet CPCs to continue to increase due to greater competition, while smart phone CPCs may see less of an impact due to advertiser opt out.

RKG has been more cautious on the loss of bidding control from enhanced campaigns and on the benefit to mobile CPCs, but has not published data on the CPC impact from the EC transition.

We continue to see Enhanced Campaigns’ CPC impact, maturity of product listing ads as the catalyst for Google in the short term.

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