Data Confirms Paid Search Momentum, Conversions Too

by Laurie Sullivan , January 13, 2012

On the eve of its acqusition by Adobe Systems, Efficient Frontier released data Friday that confirmed what paid-search and digital platform providers Covario, IgnitionOne and Marin Software clients experienced in the fourth quarter of 2011. It noted that search marketers spent significantly more.

Overall, marketers in the United States spent 14% more compared with the year-ago quarter. Retail grew by 18% year-on-year and 40%, sequentially. In the United Kingdom, retail marketers spent 10% more, compared with the year-ago quarter.

The study suggests that marketers will spend between 15% and 20% more this year in the U.S. Similar growth is expected internationally; however, macroeconomic conditions in Europe can influence growth.

Among Efficient Frontier clients, Google maintained 80% market share in Q4. The Yahoo and Bing alliance proved that clicks were 14% more valuable than Google, while also producing 9% higher ROI. Google, however, increased click share by 2.5% year-on-year.

Cost per click (CPC) for the quarter fell 5% overall. Google CPC fell by 7%, sequentially, suggesting improvements in ad delivery and increases in mobile ad spend.

The study points to a rise in mobile advertising as contributing to decline. Clicks are less expensive on mobile compared with desktop. Marketers spent more on mobile search campaigns -- between 7% and 8% on average -- compared with 2% in the prior year. Tablets now account for 50% of mobile search spend and 50% of click share.

As noted in other reports, mobile and tablet CTRs are higher than desktop campaigns. CPCs are higher on mobile than tablets, at 108% and 85%, respectively, compared with desktops. Conversion rates on mobile and tablets are still lower than desktop conversion rates at 31% and 96%, respectively.

Efficient Frontier estimates mobile search will contribute between 16% and 22% of all paid click this year.

Social should also prosper. In 2012, Facebook took 2.7% of total online ad market share, but Efficient Frontier expects the number to reach 5% by the end of 2012. Brands will continue to pump up Facebook ad budgets to capitalize on the social network’s reach and time spent online.

facebook, mobile, search

2 comments about "Data Confirms Paid Search Momentum, Conversions Too".

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Chris Nielsen from Domain Incubation, January 16, 2012 at 10:02 a.m.
What great news! But I wish it didn't come from the very people that provide services, and instead came from customers and end-users. I was hoping to hear more about conversions, but the article only specifically mentioned that conversion was LOWER on mobile, which is no surprise.
And as I read many of these articles I don't hear much about the ongoing problem of "click fraud" or is it just me that is still having a problem? :-) And since I don't hear about click fraud I can't expect to hear about "Click Laundering" or conversion fraud. That important metric has to come from clients, not agencies. I don't happily rain on the SEM parade, but the fact is that many clients are hurting from this creature in the corner that no one wants to discuss. Perhaps this will start to change this year.
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David Jaeger from Global SEM Partners, January 16, 2012 at 2:18 p.m.

@Chris Nielsen

Ages ago I tried to look at Click Fraud issues. Google does indeed have a robust system. The way I look at it, if Google is profitable, then despite the problems you invest, if it isn't profitably, find somewhere to put the money.

We are a DR firm and we find that although PPC is quite competitive (and it's on the road to be more competitive), that it's a valuable channel to invest in.