Covario: Search Budgets Rising Along With Better Leads, Higher Returns

by Laurie Sullivan, Jan 15, 2013, 4:04 PM

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Higher paid-search budgets continue to pay off in better lead generation and return on investments, confirms a recent study focusing on enterprise technology, consumer electronics, and retail.

Marketers spent 18% more on paid-search ads for the entire year and 15% in Q4 2012 compared with 2011, but search agency Covario reports in its fourth-quarter Global Paid Search Spend Analysis that the cost per click fell and conversions rose.

Marketers in the U.S. and Canada led an increase in spending during Q4 in the Americas, up 21% year-on-year. In EMEA, online spend trends continue to recover from a slowdown, with growth remaining at 10% year-on-year. In APAC, the second half of the year remained slow, but the year-on-year growth rate rose 13%.

Keyword pricing did not increase quarter-over-quarter. Year-over-year growth showed a 3% gain in CPCs, attributable to the mobile market. Mobile search spend rose 10% sequentially, with slightly higher CPCs on tablets versus desktops continuing for the second consecutive quarter.

Other influences include Facebook and Google Product Listing Ads, although the report doesn't include the two media, said Alex Funk, Covario's director of performance media and the report's author. "Really low" conversions on Facebook -- lower than Google and Bing search campaigns -- should lead more marketers to Facebook. "We're using different tactics in Facebook, such as friends of friends or connections, to help push the message," he said.

While most companies support a budget for social media, what business unit funds it, and will it remain consistent throughout the year? That's something Funk plans to evaluate in 2013.

Paid-search advertising on mobile devices such as smartphones and tablets across search engines rose through the year with mobile PPC spend increasing 30% in the fourth quarter year-over-year and 10% sequentially. For the second consecutive quarter, cost-per-clicks (CPCs) on tablets exceeded those on personal computers.

Globally, among the major search engines, Google continued to take more than 86% of the paid-search market share, and advertisers spent 13% more with Google during Q4. The Yahoo-Bing Network, with nearly 8% of the global search market share, grew 23% year-over-year.

Baidu continues to dominate China with 80% market share. Funk said the Chinese engine accounted for about 5% of global PPC spending and impressions, as well as 23% of the worldwide clicks.

For 2013, Funk recommends that advertisers increase budgets between 18% and 20% for paid-search spending in the Americas, with an emphasis on Latin America as the region’s largest growth opportunity. He also recommends a more modest 10% budget increase in Europe because of the continuing weak economy. In the Asia-Pacific, he suggests advertisers plan to increase budgets between 30% and 40%.

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