With the transition to the Search Alliance beginning this past October, North American advertisers witnessed first-hand the migration of Yahoo search sponsored listings to the Microsoft adCenter platform.
Now, with nearly a third of the search query market, U.S. advertisers have new reasons to consider investing in Yahoo and Bing. Based on increased efficiencies alone, the Search Alliance has made managing across the two search networks much less time consuming.
But the more important question for advertisers is: how are paid search ads performing in the new combined marketplace? Marin Software set out to study the impact of the transition to help advertisers make informed decisions about investing in the Search Alliance.
This wide-reaching study of paid search campaigns included data from more than 800 advertisers including Macy's, University of Phoenix, Kayak, Salesforce.com, Hawaiian Airlines, and other well-known brands and agencies, which in total spend over $1.8 billion annually on paid search. The findings were surprising.
Here are three findings from Marin Software's research that every search marketer should know about the combined Search Alliance market. By understanding the state of paid search performance on this channel, you can make more informed decisions about how to allocate spend in the U.S as well as how to anticipate future changes as the Search Alliance is rolled out internationally.
1. Search Alliance Gains Ground on Google
Post transition, the Search Alliance gained some ground on Google in paid search. Specifically, the Search Alliance increased its combined share of paid search clicks by 2 percent, to 21 percent of the total.
For marketers, these increases in volume translate into more than just increased opportunity. Because the combined platform now represents a significant share of clicks, marketers can expect more consistency in terms of keyword performance. This makes it easier to focus on optimization, rather dealing with issues where keyword data is sparse or shows erratic results.
2. Improved ROAS
Increased conversion rates and lower costs-per-click (CPCs) relative to benchmarks delivered improved return on advertising spend (ROAS) for advertisers following the transition.Excluding the impact of seasonality, conversion rates for Search Alliance advertisers increased by 12 percent relative to Google during the study period (August to December 2010). CPCs, on the other hand, declined by 20 percent relative to Google.
For marketers, this dynamic creates a favorable environment for search marketing investment.
3. Getting in Early is to Your Advantage
In addition to benefiting advertisers, the Search Alliance also has considerable upside potential for both Yahoo and Microsoft. As of December 2010, the Search Alliance was delivering 21 percent of paid search clicks, but only capturing 18 percent of the corresponding ad spend in North America. That means the Search Alliance has the potential to capture an additional 3 percent in advertising spend share if CPCs were to rise.
For marketers, it's clear that getting in early while CPCs remain low is to your advantage. As more advertisers enter the market, however, expect prices to rise.
It's clear the Search Alliance is working -- perhaps even better than Yahoo and Bing expected, given the higher efficiencies and relative improvements in performance characteristics.
As advertisers realize the potential of the combined platform, more marketers will shift spend to the Search Alliance. When they do, acquisition costs will likely rise.
In the meantime, the Search Alliance is paying healthy dividends for the advertisers who had the foresight to build out and optimize campaigns prior to the transition.
Save up to $400! Register now for SES New York 2011, the Leading Search & Social Marketing Event, taking place March 21-25. SES New York will be packed with 70+ sessions, multiple keynotes, 100+ exhibitors, networking events, and parties. Learn about PPC management, keyword research, search engine optimization (SEO), social media, local, mobile, link building, duplicate content, multiple site issues, video optimization, site optimization, usability, and more. Early bird rates expire March 4.
Last Week to Save on SES London Tickets!
Learn to engage customers and increase ROI by distributing your online marketing efforts across paid, owned & earned media. Join the leaders of today's digital marketing & advertising industry at SES London. Find out more ››
*Saver Rates expire this Friday, Dec 13.