Source: https://www.emarketer.com/content/how-google-search-ad-prices-have-risen-across-retail-categories
According to the article listed above, in Q3 2021, Beauty saw the fastest growth in CPCs, at 41% YOY, which means the advertisers in beauty category, will spend 41% more than last year if they want the same exposure on Google. This is a huge increase and we need to figure out why this happened.
From my point of view, the reason lies in the dynamics of demand and supply of ads.
The demand side, namely the advertisers, the beauty brands invested heavily in ads. Previously, their emphasis is the traditional way of advertising, for instance the television. But now we all know more transactions happened online, so it comes no surprise that the beauty brand discovery occurs online. Therefore, the demand side increased dramatically, with more bidders, suppose the supply side remained unchanged, the competition would become fiercer, the bid price would rise.
The supply side, the traffic of google and the amount of ads each user can view per day, would remain the same. The logic is simple: Google Search is quite mature, the penetration rate is too high and the users' behaviors are too stable to have dramatic change. We can conclude the supply side won't have a great change.
So, the underlying reason for this phenomenon I believe is the excess demand of online advertising from beauty brands. And this is a hard problem for brands to solve - since when competitors are investing more and more in advertising, you can't stay out of the game.
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