Paid search marketing trends: Sponsored search adspend up 24% globally

Paid search budgets are on the rise globally, up 24% on last year on average, according to a new report.

The Kenshoo Global Search Advertising Trends report examines the performance of paid search ads by analysing 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.
Notable findings from the report include:
Global Search Advertising Growing
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 percent. 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.
U.S., U.K., and E.U. Paid Search Average Cost-per-Click Rising
During 2012, both 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 optimisation strategies to sustain traffic and conversion volumes.
Yahoo! Bing Network Drives Strong Results
In the U.S., while Google delivers more overall traffic (684 percent 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 percent higher in Q3 than that of Google and the YBN click-through rate (CTR) was 29 percent higher. As a result, advertisers increased their YBN ad spend 10 percent quarter-over-quarter and 35 percent YoY, representing a faster rate of growth than Google.
Google Product Listing Ads Outperform Text Ads
Google Product Listing Ads (PLA) have gained significant traction and outperformed paid search text ads in CTR (68 percent higher), conversion rate (38 percent higher) and ROAS (25 percent 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.
Mobile Ads Having an Impact
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 percent of all search ad clicks and six percent of all spend, these devices returned just 0.6 percent of all conversions. Meanwhile, tablets generated 8.8 percent of all conversions and 10 percent of total clicks while accounting for only seven percent 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.
“Through the first three quarters of 2012, we’ve seen strong growth in paid search budgets as advertisers continue to generate exceptional results from this intent-driven marketing channel,” said Aaron Goldman, CMO of Kenshoo. “Marketers should closely examine our data as well as their own campaign benchmarks to find the best performing areas and those ripe for expansion to meet their goals. This report identifies a number of specific opportunities, including increasing investment with the Yahoo! Bing Network, ramping up Product Listing Ads for Google Shopping, and creating mobile campaigns with unique targeting for different devices.
To analyse quarterly data in its historical context through the most uniform and largest sample possible, an aggregate data set was built from Kenshoo clients who had been active during the previous 18 months. Kenshoo clients include four of the top five U.S. travel websites, six of the top 10 global hotel chains, seven of the top 10 global retailers, eight of the top 10 global telecoms, 10 of the top 10 global ad agency networks and 24 of the Fortune 50 companies.
Click here to download the full report, including key takeaways for marketers.
http://www.Kenshoo.com