Google Enhanced Campaigns Push Search Budgets To Mobile
That's per a research note in a lengthy report from RBC Capital Markets analyst Mark Mahaney.
Google made brands transition to Enhanced Campaigns by late July -- a move intended to make advertisers catch up with consumers who are already on mobile, as well as a method to accurately run search campaigns across multiple devices. The report points to a August 2012 Google study that found 38% of daily media interactions occur on a smartphone, and 66% of Internet users report using smartphones and desktops or laptops simultaneously each day.
While Enhanced Campaigns will have the greatest impact on small companies, Mahaney writes, some large and more sophisticated search buyers were already running "substantial" mobile search campaigns with return on investments comparable to desktop search campaigns, supporting "much lower CPCs offsetting lower conversion rates."
Enhanced Campaigns had a noticeable effect on the CPC (cost-per-click) for search advertising. On tablets for IgnitionOne clients during Q3 2013, CPCs rose 32%, more than double the increase for PCs. The company attributes the drop in click-through rates (CTR) for tablets compared with the year-ago quarter, which fell 20%. This is due to desktop campaigns running on tablets, resulting in less targeted advertising.
"Long-tail and 'torso' advertisers" will mainly feel the brunt of the forced changeover, Mahaney explains. It will take time for companies to adapt to bidding solely on mobile and making the media their first consideration for targeting parameters, such as time of day and proximity.
Aside from Enhanced Campaigns, product listing ads continue to gain adoption as the industry heads into the holiday season.
"The general consensus among our channel checks was that PLAs provide good ROI for retailers," Mahaney wrote. "In fact, according to one source, some retailers are generating as much as 10% of their total sales from Product Listing Ads. The average for apparel retailers may even be above 10%."
Aside from Mahaney, Robert W. Baird & Co. analyst Colin Sebastian wrote in a research note that PLAs should offset any mixed AdWords data and returns. "Enhanced Campaigns is still a controversial shift for advertisers, although our checks suggest search budgets overall remain stable."