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3 Key Themes From Q4 Paid Search

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During Google’s third quarter earnings call, CPCs and growth were a hot topic. This won’t change, especially as analysts question the impact of Facebook’s Graph Search and other market led changes.

However, the fourth quarter was extremely strong from various quarterly wrap up reports. Three key themes emerged in Q4, according to reports from Kenshoo, Marin, and Covario:

  • Volume, traffic, and conversions were all very strong.
  • Mobile and tablet traffic levels saw all-time highs.
  • Thanksgiving day is now force to be reckoned with.

Volume, Traffic & Conversions Were All Very Strong

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U.S. advertisers saw a 31 percent increase in clicks, and a 38 percent increase in impression volume year-over-year, according to Marin’s quarterly report. Those levels were the highest all year.

This trend also led to average CPC increases that were at their highest point throughout the year, and were 9 percent above Q4 2011. A rebounding economy and a longer period between Thanksgiving and Christmas helped to fuel this trend.

Google’s percentage of market share in Q4 was still dominant. It accounted for 67 percent of impressions, but 80 percent of spend. Their ability to monetize their traffic remains a head and shoulders leader.

However, according to the Marin report, Google’s share of impressions, clicks, and spend was at its lowest levels over the past year. Even if by just a few points, this an interesting data point that should drive some optimization consideration for us all.

Mobile & Tablet Traffic Levels Saw All-Time Highs

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During Q4 mobile and tablet traffic continued its incredible growth trajectory. CPCs were up by 60 percent YoY, and spend was up 30 percent, according to Covario. Desktop’s share of traffic is now down to 78 percent, and smartphones and tablets make up 12 percent and 10 percent, respectively.

The more interesting piece is confirmed by both Covario and Marin’s reports. They both reported that tablet spend was larger in Q4 than smartphones (9 percent on tablets and 8 percent on smartphones). This is despite a larger amount of clicks going toward smartphones.

covario-mobile-spend-platform-breakdown

This shift in cost is primarily drive by a higher conversion rate on tablets. Advertisers know how to bid for direct conversions and therefore have been more willing to raise CPCs to match their known value.

Smartphones have yet to be cracked in the same way due to their usage patterns being driven by more on the go functions and less direct conversions. Considering the amount of tablets sold during Q4 (14 million for iPad alone), it's easy to forecast this change to continue.

Thanksgiving Day: A Force to be Reckoned With

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This year Black Friday deals started much earlier, with many of them starting late on Thanksgiving day. This trend showed up big for paid search.

Kenshoo reported more than 60 percent growth YoY in Thanksgiving Day traffic. Thanksgiving strategy was a big topic of conversation for our retail clients and team members this year and I expect that to continue to grow next year.

Thanksgiving wasn’t the only day with large growth. All of the big retail days saw a fair amount of growth. This includes 40 percent growth for Free Shipping Day and Cyber Monday.

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The other key piece to consider is the impact Thanksgiving had on average order volume. Average order volume was up nearly 20 percent year-over-year.

This means that traffic has grown significantly, and with consumers budgets still available they were spending more. This is a very insightful stat to take action on as you plan for next year, especially considering the drop in AOV on Cyber Monday and Free Shipping days.

It make sense these days would drop online as they continue to be the primary leads of digital shopping. We as marketers have taught consumers to seek deals online these days, and it’s clear from the AOV’s they are doing just that.

Summary

Overall, Q4 was another year of growth for paid search. I’d expect this year to start off just as strong, with some continued growth and lots of exciting things to come.

The fourth quarter has certainly taken a toll on many PPC marketers who are ready to take some much needed time off. However, this season also provides to best opportunity to drive sales, test, and learn quickly.


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