Each quarter, Search Engine Watch receives a number of reports from analysts in the online advertising space. Typically, the actual numbers vary, though looking at the figures as a whole helps marketers identify trends that can be helpful in strategizing for the coming quarter.
Covario just released their Q1 Global Paid Search Spend Analysis report, hot on the heels of the Adobe Systems Global Digital Advertising Q1 2012 Update and IgnitionOne Global Online Advertising Report, both of which we covered last week. Both Marin Software and the Rimm-Kaufman Group (RKG) just published their Q1 reports, the U.S. Online Advertising Report (Marin) and the Digital Marketing Report for Q1 2012 (RKG).
Covario’s analysis, which focuses on activity in the high-tech and consumer electronics sectors, showed a 15 percent YoY increase in PPC ad spend in the Americas, in line with the general trend shown by other analysts. In addition, they reported an 88 percent YoY increase in spend in the Asia-Pacific region, with a 2 percent decline in Europe (attributed to ongoing macroeconomic pressures).
In their report, RKG found that total paid search spend grew at 30 percent YoY in Q1 2012. Mobile comprised 12 percent of all organic search visits in Q1 and 13 percent of all paid search clicks. They also report that the tablet share of PPC nearly quadrupled from Q1 2011, and the iPad alone accounted for nearly 7 percent of all clicks.
Marin Software also found that increased click volume (46 percent higher YoY) more than made up for lower CPCs, with resultant robust growth in Google ad budgets leading to higher spend. This is in line with other reports. They point to algorithm changes, advanced match types, site links and mobile devices as potential reasons for the CPC decline.
So what sense can paid search marketers make of these trends? Analysts from each reporting company offered some tips for Search Engine Watch readers.
Take Advantage of Google Product Listing Ads’ Lower CPCs
RKG data shows Google’s Product Listing Ads format exhibiting huge traffic growth. In their report, they note, “…traffic to Google’s Product Listing Ads format continued its own surge, representing 11% of Google clicks, but PLAs commanded 18% lower CPCs than standard text ads.”
“While the revenue per click of PLAs is on par with standard text ads, our advertisers are paying significantly lower CPCs,” said Senior Research Analyst Mark Ballard. “This suggests competition for PLAs remains relatively low, making them a great opportunity to pick up incremental traffic at a good value.”
Attribute Conversions Across Channels & Devices to Maximize ROI
In their quarterly report, Adobe reported a 93 percent YoY increase in Facebook ad spend; they noted that this one channel now represents between 3 to 5 percent of total search spend. Social media, they said, continues to be a strong digital advertising channel.
Dr. Siddharth Shah, Director of Analytics with Adobe Digital Marketing Business, told us, “With the growing impact of social as a marketing channel as well as the rapid increase in mobile device/tablet usage, the average consumer touches more devices and channels than ever before.” He recommends, “It is imperative for advertisers to measure the consumer path across the entire sales funnel and apply the right attribution to determine the correct media mix.”
Segment Out Mobile Traffic; Develop Mobile & Tablet Search Strategies
IgnitionOne reported an overall increase in mobile search spend of 221.1 percent over the same quarter last year, while clicks on mobile ads increased 246.1 percent YoY.
RKG’s Ballard notes there are good reasons why mobile CPCs run lower than their desktop counterparts.
“One of the biggest is that the measurable ROI is simply far worse for smartphones, particularly for online pure plays,” he said. Ballard advises marketers, “If you are not already segmenting out mobile traffic and bidding it accordingly, now is the time to do so. Also, advertisers should not make the mistake of lumping tablets and smartphones together under one mobile umbrella as performance can differ dramatically between the two.”
Roger Barnette, president of IgnitionOne, believes mobile search is a highly valuable and underutilized channel.
“Queries on mobiles and tablets are growing quickly and CPCs are typically lower, making mobile search a great investment,” he said. Barnette advises marketers, especially in retail and travel, “…should invest in developing mobile and tablet search strategies that include sufficient testing so they can learn how to best utilize these growing channels to reach their campaign goals.”
Increase Conversion Rates with Multivariate Landing Page Testing
Charles Gaylord, Research Strategist at Covario, said that advertisers have a lot to be excited about, given rising click volumes and declining keyword pricing.
“We have found that the most successful paid search campaigns have woven an element of multivariate landing page testing into the mix to fine-tune the messaging and content that most effectively motivates consumers to take action,” Gaylord said. “Not only have these efforts led to higher conversion rates, but the search engines have rewarded these campaigns with higher rankings at a lower cost.”
Refine Match Types for Greater Efficiency
Marin’s Q1 analysis shows that gains in efficiency over the past year have been a result, in part, of advertiser efforts to refine match types.
Marin VP of Marketing Matt Lawson advises marketers, “Refining match types from Broad to Phrase or Exact, increases relevance and click-through rates for keywords, thus improving quality scores and lowering costs.” As further evidence of how this tactic can improve campaign performance, he shared, “In the past year, search marketers have increased their use of Exact Match, growing their click-share by 4% while increasing share of ad spend by 1%.”
Apply Negatives for Brand Terms on Bing/Yahoo as These CPCs are Rising
RKG’s Ballard shared insight on client CPCs for branded vs. non-branded terms. “The CPCs of our clients’ brand terms on Bing have risen far faster than CPCs on non-branded terms as the adCenter team has made moves to broaden the competition in this space,” he said. “Advertisers should watch their bids and apply appropriate negatives to ensure that they are not paying more than they need to in this easily overlooked segment.”