Click-through rates and conversion rates on tablets rose sharply in 2012, and a new report from Marin Software projects tablets will account for 20 percent of Google’s paid search ad clicks in the U.S. – and about $5 billion in revenue.
Overall, the share of paid search clicks from mobile devices rose around the world in 2012, and people are more engaged with search results when they're mobile, according to Marin.
The State of Mobile Search around the Globe 2013, an annual report, analyzed more than $4 billion in paid search spend by brands and advertisers in 13 countries. Most of Marin’s clients are large advertisers spending more than $100,000 per month on paid search.
Analyzing the average CTR across devices, Marin found CTRs for smartphones were 107 percent higher than desktops computers, while tablet CTRs were 37 percent higher. At the same time, cost-per-click was lower on mobile: smartphones clicks were approximately 36 percent cheaper than desktop clicks, and tablet clicks were about 17 percent cheaper.
But the bargains won't last, especially with Google's enhanced campaigns on the way, which will eliminate any difference between tablet and desktop CPCs later this year. CPCs on tablets and smartphones increased 25 percent and 13 percent respectively during 2012, while CPCs on computers increased approximately 9 percent.
Conversion rates for smartphones were lower than for tablets and desktops, while conversions on tablet devices improved 31 percent in 2012, compared to 9 percent for smartphones and 7 percent for computers. Marin noted, however, that many smartphone conversions likely take place in physical stores, as consumers search for products or locations on their phones before traveling to the store to buy.
In the U.S., Marin Software clients saw an increase in paid search clicks coming from Google, accounting for 23.4 percent in 2012, up from 14.2 percent the previous year.
Marin's US customers increased their mobile search spending by 85 percent in 2012, from 10 percent to 18.4 percent. The company says that mobile devices will account for one-third of paid search clicks and one-third of search budgets by December 2013.
In the UK, Google's share of paid clicks from mobiles increased 65 percent, while in Europe, the increase was even greater, increasing from 5.9 percent to 14.5 percent. UK advertisers increased their share of search budget on smart mobile devices from 9.94 percent to 19.32 percent last year, an increase of 94 percent, while Eurozone advertisers upped their investment in mobile search from 4.8 percent to 11.8 percent of paid search budgets, an increase of 146 percent.
Mobile CTRs were higher than for desktops in the UK and Europe. In the UK, average clickthrough rate for phones was 5.8 percent, compared to 4.78 percent in Europe. UK tablet CTR was 3.93 percent, with 4.8 percent CTR on tablets in the rest of Europe.
Unlike in the US, mobile costs per click are rising, with tablet CPCs increasing an average of 36 percent in the UK and 24 percent in Europe. (Marin noted that some of this could be due to currency fluctuations.)
Rising CPCs could be the result of better mobile conversion rates in these regions. While desktops and laptops still offered the best conversion rates, in Europe, tablet conversion rates of 1.5 percent almost equal those of desktops at 1.8 percent, with phones lagging at .5 percent. Again, Marin noted that smartphone conversions are likely under-reported.
In the rest of the world, Marin analyzed Google search data and found that mobile's share of paid search clicks was highest in Australia (21 percent), Japan (16.2 percent) and Singapore (22.5 percent). While advertisers' spending on paid mobile search in Singapore was close to on par with CTRs, at 22.5 percent of total budget, other countries had not caught up.
The report noted that optimizing mobile ads and handling them separately from other paid search campaigns can give marketers more control over campaigns and increase overall performance.