Positive Growth: Paid Search, Market Spend Up

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A flurry of paid-search reports surfaced Thursday as if trumpeting the unwrapping of Q3 2012 financial reports and signaling the entrance into the holiday season. Covario, Kenshoo, and Rimm-Kaufman Group (RKG) released analysis Thursday, following IgnitionOne, and Marin Software within the past few weeks.

Each report details a different piece of search engine marketing.

Covario focuses on the international paid-search markets mostly for enterprise, consumer electronics and retail companies. The analysis suggests growth in the Americas for Q4 2012, although Europe and Asia-Pacific will experience some softness after Q3 sequential declines for paid-search investments in those regions.

Covario also analyzed the cost-per-click (CPC), which fluctuated per engine. For the second consecutive quarter, advertisers experienced 6% inflation in keyword prices. On Google, CPCs rose 8% year-over-year to $1.41, and 7% sequentially. The Yahoo Bing network fell 10% to $1.08 compared with the year-ago quarter, and 4% sequentially. China's Baidu rose 10% year-over-year to $0.19, and fell 4% sequentially. Finally, the CPC average for Russia's Yandex rose 13% year-over-year to $0.55, and fell 11% sequentially.

Covario's clients spent 33% more on paid-search ads in Q3 2012, compared with the year-ago quarter. Kenshoo's clients spent 24% more, but report regional CPC inflation and positive growth for the Yahoo Bing network. The analysis, based on more than $3 billion in annual global paid-search budgets, identified consistent CPC rates in the U.K., which are currently at $0.45 USD, could match the U.S. CPC rate of $0.48 by Q4 2012.

With CPC rising, marketers will have to increase search ad budgets and/or develop sophisticated optimization strategies to sustain traffic and conversion volumes.

In Q3, the Yahoo Bing Network drove online sales revenue at a more efficient rate compared with Google, according to Kenshoo. The report points to the return on ad spend for paid search. On the Yahoo Bing Network, that return rose 28% in Q3 compared with Google. Click-through rates (CTR) rose 29%.

The increase resulted in marketers spending 10% more sequentially in the quarter, and 35% YoY, representing a faster rate of growth on the Yahoo Bing Network, compared with Google. Kenshoo also highlighted findings from Google Product Listing Ads. In October, PLAs move to a paid model in the U.S., with the U.K. and Europe expected to follow in 2013.

Growth in consumer adoption has been a strong driver of click-volume growth on mobile devices. Marketers are beginning to increase the amount spent on mobile device campaigns. Marin Software notes that in Q3 2012, desktops and laptop computers still command the vast majority of search spend, but smartphone and tablet devices accounted for 19% share of clicks and 14% share of spend.

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