Keyword demand is up as organizations increase their online advertising budgets and expanded their understanding of search marketing.  Both online advertising and search marketing are becoming strategic components of the overall marketing mix because of their growing effectiveness. Here is the full list of ten reasons:

In the third quarter of 2006, Fathom Online found that the average keyword price paid by online advertisers had increased 16.5% percent to $1.48. Here are some of the underlying reasons behind this change:

  1. Google and Yahoo are continuing to tweek their relevancy engines to better allign ads with the appropriate topics.  Better allignment means higher click-thru rates which in turn translates into a better focused target market.
  2. Realization by marketers that search engine marketing generates a self-selected (they select the topic) pro-active (they have to click) consumer.
  3. Branding competition among well-heeled organizations to cement certain phrases into the mind of consumers.
  4. Steady stream of first-time advertisers joining the mix with little understanding of how much to bid.
  5. Better conversion rates on advertisers’ website landing pages make each click more valuable for return on investment calculations.
  6. Understanding that there is additional ROI value in search traffic beyond immediate clickstream conversion is slowly being factored into prices.
  7. Keywords previously underdiscovered – further down the long tail of terms – are being bought up, and previously undervalued specific keyword prices climb as a result.
  8. Companies are buying more keywords.  Because of the overall effectiveness of this new medium, they are expanding their use of it.
  9. Other forms of media are losing ground.  The effective ROI of other media is losing ground as the Internet garners more and more attention.
  10. Seasonal products and seasonal opportunities create momentary surges raise the bar on a longer term basis.