The Monopoly of Rising Click Costs

Advertising on the Google search page is an ever-changing game of Monopoly. Just like the classic board game, acquiring the best ad position requires budget management and strategy. You have to anticipate what properties will generate the most income.

When another player puts up a house or a hotel on their property, the cost of playing soars. You have to up your game. And right now, the competition is heating up in home improvement.

Why is This Happening Now?

The cost of paid search clicks on Google, Bing and Yahoo are rising for some home improvement verticals. What do these increases mean and  how will they impact your lead volume and costs? Here’s what you need to know about the market fluctuation.

A good chunk of the home improvement industry is made of homegrown companies, usually small to medium in size. When small to medium size companies compete, without large competitors or mature brands, the market becomes fractured.

A fractured market means that homeowners have not given their loyalty to one company. With contractors using AdWords as an essential tool to win homeowners loyalty, it means some verticals are reaching maturity. That means there will be higher costs, but also more stability.

Has This Ever Happened Before?

Window contractors know all too well the story of rising ad costs. Many years ago, AdWords cracked the window market wide open and every company in town was competing for the top spot. For window contractors, the value was clear. Google ads worked and they were worth paying for.

Because of this, the cost of window clicks is significantly higher. To get a top 3 ad position, the average cost for a homeowner clicking on your ad is $5.27. That is 2-3X higher than other home improvement products, such as kitchen remodeling, awnings, sunrooms and bathrooms.

Why? In the replacement window market, many mature brands are willing to shell out for good advertising. These brands have the budget to do tons of offline marketing, which makes the competition mighty stiff.

So…Who’s Next?

Bath remodelers have never had this problem, but they are next up on the ticket. The average cost-per-click on a bath ad was $1.84 last year. Now, that cost has increased to an average $2.78 per click to maintain a top-3 ad position, a 50.86% increase.

The good news is that this change has happened slowly. That means business is booming and will continue to grow. The bath remodeling market is maturing, and bigger brands are emerging. Most importantly — bath remodeling companies have recognized AdWords as a powerful way to generate leads.

What Can I Do Now?

With Monopoly, you have to play the long game. Park Place may cost a pretty penny, but people won’t land on it every trip around the board. It’s those in-between properties – Tennessee Avenue, Marvin Gardens – that bring in sustainable income.

To win, you have to stay aggressive. Think of your paid search campaigns the same way. You may be spending more now to put up a house or a hotel, but you’re investing in sustainable lead volume with reasonable margins. And if you stick it out, you’re sure to get your money’s worth.