SEM: Still Trendy After All These Years

by Aaron Goldman, Jan 30, 2013, 10:23 AM

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It’s been a few years since I officially brought sexy back to search, but I’m proud to proclaim that SEM is hotter than ever. Over the last few weeks, I’ve been poring over data in our platform to identify global search advertising trends. Here are some of the tantalizing insights:

1. Global search ad budgets were up 32% in 2012. Paid search continues to prove its worth to marketers as a key contributor to the bottom line. In fact, looking at all advertisers that tracked revenue through our platform in 2012, we saw an aggregate $8.76 ROI. In other words, for every $1 spent on paid search in 2012, marketers got $8.76 back in online sales revenue. Now that’s how you make it rain!

2. Click-through rates have steadily increased each of the past four quarters. Consumers clearly trust ads that meet the intent of their queries, and search marketers have done a great job of maximizing relevance. In Q1 of 2012, we measured overall paid search click rates at 1.04% globally. That number rose to 1.12% in Q2, 1.31% in Q3 and 1.63% in Q4. The major search engines have also done a great job at creating new opportunities to deliver quality ads through formats such as sitelinks, product listing ads, location extensions, etc. The result? Click click boom!

3. U.K. cost-per-click surpassed U.S. in Q4. It’s always interesting to see the differences across the pond between the U.K. and U.S. -- and I don't mean just the spelling of "optmisation." Our data shows U.K. paid search budgets were up 11% year-over-year in Q4, while U.S. was up 23%. However, the consumer online shopping habit seems to be really heating up in the U.K. During the festive shopping season in 2012, we saw U.K. retailers generate £12.95 (that’s over $20 USD!) in direct ROI from paid search. As a result, our U.K. advertisers are more willing to bid higher for keywords, driving up Q4 CPC rates to an average of 48 cents (USD) across verticals, compared to 45 cents in the U.S. This marks the first time we’ve tracked overall CPC in the U.K. higher than U.S. Talk about trading places!

4. Mobile devices account for 19%-21% of all paid search clicks in the U.S. and U.K. The migration to mobile has been a long-documented trend, but it’s wild that about one in every five paid search clicks now comes from a smaller screen. What’s even wilder is the discrepancy in budgets and click costs. Mobile phones represent just 5% of overall paid search ad spend in the U.S., and 2% in the U.K. Tablets fare better, with 8% of U.S. spend and 11% of U.K. budgets. However, there’s a heavy CPC discount for mobile phones (25 cents U.S., 11 cents U.K.) and tablets (37 cents U.S., 36 cents U.K.). Tablets are living up to the hype, with 9% of all online conversions in both the U.S. and U.K. -- but phones deliver just 1.4% and 2% respectively. This explains why phone clicks are so much cheaper. Marketers must create bespoke (more Britspeak!) campaigns for each device type. When it comes to phones, the key is making the message and landing page (or app) fit the smaller screen and meet the need of the on-the-go consumer. It’s also important to redefine success metrics and assign proxy values for clicks (and calls!) that may not drive direct online conversions but influence the path to purchase. So get your numbers and call me maybe!

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1 comment on "SEM: Still Trendy After All These Years".

1. David Scacco from Quantcast
   

   commented on: February 1, 2013 at 3:20 p.m.
   Insightful data. SEM is clearly a healthy business. What is the trend for ROI? Do you have this for prior years? Thanks DS

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