How Beauty Brands Can Navigate Rising Google Ad Costs

Prices are rising across industries, with the cost of everything from shipping to advertising increasing for consumers and brands. For beauty brands, some of those increases have been particularly acute.

In the third quarter of this year, beauty brands saw paid search on Google-prompted CPCs (cost per click) rise 41 percent year-over-year, the fastest of any category on Google and nearly double the average rate for the second consecutive quarter, according to digital marketing firm Tinuiti’s Google Ads Benchmark report. For comparison, for apparel brands, the increase in CPCs was only “slightly above average” at 24 percent. Along with the increase in CPCs, spend and clicks on Google increased on average 34 percent and eight percent across industries, respectively.

All that data translates to more expensive advertising on Google for beauty brands, a category that was challenged to make its case to customers stuck at home during the pandemic. But as people have begun to participate in social gatherings again, they’ve also increased their spend on beauty and makeup, encouraging beauty brands to vie for their attention.

But not all beauty brands will experience the lockdown lifting bump in sales, meaning budget-conscious marketers will have to take a closer look at their spending. Assessing the full picture of the channel’s effectiveness before pulling back spending or diverting costs elsewhere is key.

“[Brands] shouldn’t be concentrating on CPCs and click volumes, they should be absolutely concentrating on conversion rates and return on ad spend,” said Ed Foster, GroupM vice president and managing partner of search and social.

If a brand’s sales are increasing thanks to Google paid ads, the costs are worth it, even as the cost to advertise there rises. But if sales haven’t grown in tandem with those rising costs, it might be time to consider more efficient strategies — like investing in other search engines or beefing up search engine optimisation (SEO) — without fully cutting off spending on Google ads.

Playing the Google Ad Game

Some platforms, including Snapchat and Facebook, saw advertising revenue drop in the third quarter due to outside factors such as supply chain disruptions and Apple iOS privacy changes. Google, meanwhile, had its highest sales growth in more than a decade, nearly doubling its profits in the third quarter, in large part thanks to an increase in digital advertising spend.

Those earnings come as Google is contesting a lawsuit jointly filed by attorneys general spanning 15 US states and led by Texas, which alleges the company enjoys an unfair competitive advantage and earns at least double and up to four times as much on advertising sales compared to other digital advertising exchanges, all of which contributes to an inflated cost to advertise on the platform that brands then pass on to consumers through higher prices.

Regardless of the legality of Google’s practices, paid advertising on the platform is still a major component of many brands’ marketing strategy, particularly as Google enhances its shopping capabilities. Google’s suite of advertiser tools, including text-based ads, search ads and Google Shopping ads, offer beauty brands a marquee opportunity to get their product, name and price in front of a large number of consumers.

But if a brand isn’t seeing sales conversions to match the increase in costs to run paid ads on Google, there are options. For example, Google offers free listings in its Google Shopping tab, where brands’ products can appear at no cost. Google is also testing its shopping features like integrations with YouTube videos and live streams, where beauty brands typically already have invested marketing resources.

Although Google has become synonymous with all digital search, there are other platforms that brands can consider as part of their marketing mix. Bing traffic, for example, “might not be at the same volume as Google, but the quality of that traffic is very good,” Foster said.

The value of strong search engine optimisation can’t be overstated, either. SEO, which hinges on improving keyword tagging to bolster search result rankings, also helps improve the quality of a brand’s e-commerce site as well as increase traffic from natural search listings, as well as paid search from social, programmatic and display ads, said Foster.

Brands themselves have touted the importance of SEO. In August, Sephora launched a campaign that offered a double-win: educate consumers on the impact of algorithmic bias against Black people as well as promote the Black-owned brands that the beauty retailer carries and improve its SEO. Working with agency R/GA, Sephora encouraged consumers to use the hashtag #BlackBeauty on social media to improve the search results for the query (the first Google result for the phrase was a Wikipedia page to the 1877 novel “Black Beauty” by Anna Sewell). A representative for Sephora said the campaign was an effort to highlight the importance of “equity in search.”

In order to improve SEO, brands should do deep keyword research that may include more niche or longer search queries related to a brand or product.

“[SEO] is a foundational digital channel,” said Foster. “Get SEO right to start with, that’s just hygiene.”

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