Kenshoo, a digital marketing software provider, published its inaugural quarterly report, "Kenshoo Global Search Advertising Trends." The report examines the performance of paid search ads by analyzing aggregate campaign data across search engines including Google, Yahoo!, Bing, Baidu, and Yahoo! Japan based on more than $3 billion in annual paid search budgets managed through Kenshoo.
Through the first three quarters of 2012, global paid search budgets were significantly higher year-over-year (YoY). For Q3 2012, the YoY growth rate was 24%. The increase in global search ad spend comes despite average cost-per-click (CPC) being relatively flat YoY, reflecting incremental budgets being allocated to paid search.
During 2012, the U.S. and U.K., as well as the broader European Union, have shown steady CPC increases quarter-over-quarter (QoQ). If growth rates remain consistent, CPC rates in the U.K., which are currently at $0.45 USD, could match the U.S. CPC rate of $0.48 by Q4 2012. With CPC rising, marketers will have to increase search ad budgets and/or develop sophisticated optimization strategies to sustain traffic and conversion volumes.
In the U.S., while Google delivers more overall traffic (684% more in Q3 2012), the Yahoo! Bing Network (YBN) drives online sales revenue at a more efficient rate. Specifically, the return on ad spend (ROAS) of paid search on YBN was 28% higher in Q3 than that of Google and the YBN click-through rate (CTR) was 29% higher. As a result, advertisers increased their YBN ad spend 10% quarter-over-quarter and 35% YoY, representing a faster rate of growth than Google.
Google Product Listing Ads (PLA) have gained significant traction and outperformed paid search text ads in CTR (68% higher), conversion rate (38% higher) and ROAS (25% higher). Google Shopping moves to an all paid model in the U.S. on October 17, 2012, with the U.K. and Europe expected to follow in 2013. This means only merchants who leverage PLA will be present in the search results, making these findings especially notable.
Representing 13% percent of total U.S. paid search spend, mobile phones and tablets generated 21% percent of all U.S. search advertising clicks. While mobile phones accounted for 11% of all search ad clicks and 6% of all spend, these devices returned just 0.6% of all conversions. Meanwhile, tablets generated 8.8% of all conversions and 10% of total clicks while accounting for only 7% of total ad spend. These converging trends illustrate the impressive performance of tablet paid search for top advertisers, as well as a move toward differentiating paid search campaigns on mobile phones to better accommodate mobile searchers and achieve complementary conversions that aim for something other than direct online sales.