Commentary

ROI Rising As Brands Sink 24% More Of Their Budgets Into Paid Search, Per Report

by Laurie Sullivan , Staff Writer, January 15, 2015

Return on investment rose as revenue outpaced the rise in spend by brand advertisers across the Americas on Google and the Yahoo-Bing Network.

The results -- released in Kenshoo's fourth-quarter report, based on their clients' activity -- for search advertising suggest that marketers spent and received in return the highest levels of investments during the past five quarters in Q4. Ad spend rose 24% year-on-year, while revenue jumped 16%, year-over-year, per the report.

Consumers engaged more with ads as well, per Kenshoo. In the Americas, click-through rates rose 7% compared with the year-ago quarter. Clicks rose 9% as ad impressions remained stagnant, rising about 2%. Costs per click rose slightly -- about 6% -- compared with Q4 2013. The average CPC fluctuated between $0.60 and $0.70.

CPCs across all devices rose, but smartphone clicks came in at about $0.61 compared with desktop at $0.71. The cost for clicks on tablets came in at $0.67.

In the Americas mobile devices accounted for 34% of search spend and 37% of clicks. In EMEA, marketers invested 33% of their search budgets on mobile devices and 34% of clicks. In Asia-Pacific and Japan, those numbers were 38% and 44%, respectively.

The average CPC in the fourth quarter was $0.70 in the U.S., while for Brazil it was $0.23, and in Canada it was $0.49.

EMEA tells a different story among Kenshoo clients. In EMEA, click-through rates rose 31% compared with the year-ago quarter. Clicks remained stagnant, and ad impressions fell 23%. Costs per click rose 8%, compared with Q4 2013. Advertisers spent about 8% more in the quarter, compared with the year-ago quarter.

Search marketers in EMEA drove as many clicks in Q4 2014 as they did last year with 23% fewer impressions, reflecting optimized campaign strategies addressing keywords, creative, and bids.

Mobile comprises one-third of both clicks and spend for search in EMEA. Tablet search ads consistently have higher cost-per-click relative to mobile phones and saw less of a decrease in Q4 during the previous quarter, per Kenshoo clients.

Social impressions in the U.S. saw declining rates, decreasing 79% YoY. Social clicks rose 10% YoY, but the social click-through rate skyrocketed at 430% YoY, the company said.

The overall data is from more than 6,000 Kenshoo advertiser and agency profiles across 17 vertical industries and 51 countries, spanning the Google, Bing, Baidu, Yahoo, Yahoo Japan and Facebook ad networks. Only accounts with five consecutive quarters of stable data from October 2013 through December 2014 were included in the analysis. The resulting sample includes more than 425 billion impressions, 6 billion clicks and $3.75 billion (USD) in advertiser spend.

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3 comments about "ROI Rising As Brands Sink 24% More Of Their Budgets Into Paid Search, Per Report".

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Paul Martin from Grainger, January 15, 2015 at 5:11 p.m.
This article doesn't seem to paint the whole picture around net search results. Google changed their paid and organic SERP layout in Q1 of 2014, which means comparing Q4 2013 to 2014 is not the same. My company noticed an increase in paid clicks, especially on brand terms, after the SERP layout change. So is everyone paying more for the additional paid clicks that used to be free? Was there a revenue loss for organic search with the increase in paid clicks? Was there a large net gain in revenue for PPC and SEO combined?
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Laurie Sullivan from lauriesullivan, January 15, 2015 at 5:16 p.m.

Thanks for your post, Paul. Is Grainger paying more for the additional paid clicks that were once free? Do you see a revenue loss for organic search with the increase in paid clicks? Are you seeing a large net gain in revenue for PPC and SEO combined? It would be helpful if you could share, and perhaps others see the same as you.

Neil Mahoney from Mahoney/Marketing, January 16, 2015 at 5:02 p.m.

When will this fixation on clicks ever end?? A momentary click has no greater value than a magazine reader briefly scanning an ad, but taking no further action. The only thing is does for the advertiser is increase brand awareness a bit, perhaps. In fact a click could be nothing more than a mistake.