With online advertising being one of the fastest growing mediums for companies to use it’s no suprise that certain companies are taking it upon themselves to start cranking up the prices.
A recent article published by Bloomberg shows that Google’s average cost per click (CPC) has risen by over 3%. Most of the search companies are raising prices and their profits rise along with it.
The search industry is a little unusual when compared to traditional media companies. Like most businesses, selling advertising follows the supply and demand model. If you raise the prices then you will get less custom, similarly if you lower prices you will generally get more custom. It’s all about striking a happy medium. However, companies like Yahoo, Microsoft and Google all hold the search monopoly – their nearest competitor is Ask, who have a pitiful market share when put in comparison. This hefty market share means that they can essentially charge whatever they want for search advertising. Some companies may choose to not bother, but that only means more exposure for their competitors.
If only there was a way to advertise to the masses online for free…