• by Laurie Sullivan  @lauriesullivan, October 22, 2012

Google's downward sliding cost per click (CPC) last quarter, caused by an increase in mobile traffic, could take an upward turn in time for the holiday season. Adobe's Q3 2012 Global Digital Advertising report released Monday analyzes the past quarter to forecast Q4 trends.

As mobile traffic continues to grow, Adobe expects one in five paid-search clicks to originate from a smartphone or tablet. Overall, the company's research suggests strong growth in search during the holiday season, with between 15% and 20% in both the U.S. and Europe. The decline in CPC due to the increase in less expensive mobile traffic appears to have bottomed out. CPCs should rise in Q4 due to the seasonality of retail as well as the impact of Google Shopping transitioning to a paid model.

Search -- especially on mobile devices -- should remain a major part of the marketing strategy, given growth in mobile device use and attractive return on investments. As Google explained last week during the company's earnings release, the decrease in overall Google CPCs points to an increase in share of mobile clicks, where CPCs are less expensive.

Retail CPCs continue a downward trend, about 9% down year-on-year, also due in part to the increased use of mobile search. In Q3, U.S. click share for Bing and Yahoo gave back some prior-quarter gains, standing at a 17% share.

Overall search spend rose YoY across PC, smartphone, and tablet devices, but conversion rates, CPCs, and ROI for these devices varied. Conversion rates by mobile operating system continue to be more important. The Adobe report suggests it indicates that marketers have an opportunity to drive higher returns based on the OS, not just the campaign or device.

Overall iOS conversion rates came in nearly double when compared with Android. Across geographies, iOS conversion rates were significantly higher across the board, with overall conversion rates up to 93% higher than Android conversion rates. Higher conversion rates, when matched with an 18% lower CPC, gave iOS search traffic two times the ROI of Android search traffic, according to the report.

Mobile users account for nearly one-quarter of all Facebook engagement, up fourfold prior to May, about the Timeline format change.

Overall, social engagement and paid search continued to grow in Q3. The report defines "engagement" as likes, comments, and shares. The combined grew 896% YOY from nearly zero.