2011 Search Marketing - Benchmark Report (PPC)

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MarketingSherpa 2011 Search Marketing Benchmark Report – PPC Edition

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INTRODUCTION FROM HUBSPOT ABOUT THIS EXCERPT When it comes to inbound marketing, combining PPC with SEO can often make for powerful results. When used correctly PPC can be extremely valuable to organizations trying to attract traffic and leads to their websites. Many companies split their dollars between SEO and PPC, the idea being that PPC supports their search presence until their organic rankings reach page one, at which point they end or reduce their PPC spend for that keyword. We also believe that PPC works well for testing. We use PPC for testing titles, offerings, email subject lines, ad copy and keyword phrases. It lets us know right away what will work and what won’t. We hope that the information in this excerpt from MarketingSherpa’s 2011 Search Marketing Benchmark Report – PPC Edition will help marketers determine how best to spend their PPC dollars. The pages we have chosen to sponsor show key benchmarks and metrics. We think this is important information for companies to have because when you measure your efforts with those of other organizations, similar in size and target market, you get a better sense of how you are succeeding. The metrics in this excerpt cover each stage of the PPC process, from keywords to conversions. We are only sponsoring a small percentage of MarketingSherpa’s 2011 Search Marketing Benchmark Report – PPC Edition. To get a sense of what the complete 189 page report contains, we’ve also included the full table of contents as well as the Executive Summary. Enjoy! The HubSpot Team



2011 Search Marketing Benchmark Report – PPC EditionUS $447 / ISBN: 978-1-936390-01

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2011 Search Marketing Benchmark Report – PPC EditionResearch and Insights on Optimizing PPC Campaigns

from Keywords to Conversions

Lead Author

Jen Doyle, Senior Analyst

Contributors

Sergio Balegno, Research Director

Production Editor

Brad Bortone, Editorial Production Manager

i


For permissions contact [email protected]. For more copies, visit http://www.SherpaStore.com




ii



TABLE OF CONTENTS

Table of Contents .................................................................................................................... ii

Director's Note......................................................................................................................... 2

Executive Summary ................................................................................................................ 3

The state of PPC...................................................................................................................................4

PPC maturity.........................................................................................................................................4

Chart: PPC maturity.......................................................................................................................4

Perceptions of PPC at budget time .......................................................................................................5

Chart: Perceptions of PPC at budget time.....................................................................................5

Perceptions on the most effective PPC objectives................................................................................6

Chart: The effectiveness of PPC objectives...................................................................................6

Social impacts PPC performance .........................................................................................................7

Chart: Average clickthrough rates by social media use .................................................................7

Mobile search in its' infancy as a marketing tactic ................................................................................8

Chart: The impact of mobile search ...............................................................................................8

Local search has reached maturity as a marketing tactic .....................................................................9

Chart: The impact of local search ..................................................................................................9

Search partnerships............................................................................................................................10

Chapter 1: PPC Benchmarks ................................................................................................. 2

Budgeting for PPC ................................................................................................................ 12

Online marketing budgets ...................................................................................................................12

Chart: Online marketing's share of the budget.............................................................................12

Chart: Online marketing budget allocation...................................................................................13

Chart: Online marketing budget allocation by organization size ..................................................14

Chart: Online marketing budget allocation by primary market .....................................................15

Chart: Online marketing budget allocation by industry sector ......................................................16

Chart: Online marketing budget allocation by PPC maturity........................................................17

Perceptions of PPC at budget time ..................................................................................................... 18

Chart: Perceptions of PPC at budget time...................................................................................18

Chart: Perceptions of PPC at budget time by organization size ..................................................19

Chart: Perceptions of PPC at budget time by primary market .....................................................20

Chart: Perceptions of PPC at budget time by industry sector ......................................................21 Chart: Perceptions of PPC at budget time by PPC maturity ........................................................22

Increasing PPC budgets .....................................................................................................................23

Chart: Expected changes in PPC budgets...................................................................................23

Chart: Expected changes in PPC budgets by organization size..................................................24

Chart: Expected changes in PPC budgets by primary market..................................................... 25

Chart: Expected changes in PPC budgets by industry sector......................................................26




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Chart: Expected changes in PPC budgets by PPC maturity........................................................27

Clicks are the greatest PPC expense .................................................................................................28

Chart: The allocation of PPC budgets..........................................................................................28

Chart: The allocation of PPC budgets by organization size .........................................................29

Chart: The allocation of PPC budgets by primary market ............................................................30

Chart: The allocation of PPC budgets by industry sector.............................................................31 Chart: The allocation of PPC budgets by PPC maturity...............................................................32

Google dominates PPC budgets.........................................................................................................33

Chart: Search engine allocation of PPC budgets.........................................................................33

Chart: Search engine allocation of PPC budgets by organization size ........................................34

Chart: Search engine allocation of PPC budgets by primary market ...........................................35

Chart: Search engine allocation of PPC budgets by industry sector............................................36

Chart: Search engine allocation of PPC budgets by PPC maturity..............................................37

Investing in PPC .................................................................................................................................38

Chart: Actual PPC budgets..........................................................................................................38

Chart: Actual PPC budgets by organization size .........................................................................39 Chart: Actual PPC budgets by primary market ............................................................................40

Chart: Actual PPC budgets by industry sector.............................................................................41

Chart: Actual PPC budgets by PPC maturity ...............................................................................42

Target objectives................................................................................................................... 43

Perceptions on the most effective PPC objectives..............................................................................43

Chart: The effectiveness of PPC objectives.................................................................................43

Chart: Very effective PPC objectives by organization size ..........................................................44

Chart: Very effective PPC objectives by primary market .............................................................45

Chart: Very effective PPC objectives by industry sector..............................................................46

Chart: Very effective PPC objectives by PPC maturity ................................................................47 Chart: Very effective PPC objectives by social media use...........................................................48

Marketer insights: PPC strategy development ....................................................................................49

B2B marketers share insights on planning PPC strategies..........................................................49

B2C marketers share insights on planning PPC strategies .........................................................52

PPC metrics ........................................................................................................................... 54

Step 1: Keywords................................................................................................................................54

Chart: Number of target PPC keywords.......................................................................................54

Chart: Number of target PPC keywords by annual PPC budgets ................................................55

Chart: Number of target PPC keywords by organization size......................................................56

Chart: Number of target PPC keywords by primary market ......................................................... 57

Chart: Number of target PPC keywords by industry sector..........................................................58

Chart: Number of target PPC keywords by PPC maturity............................................................59

Chart: Most commonly used keyword match types......................................................................60

Chart: Most commonly used keyword match types by organization size .....................................61

Chart: Most commonly used keyword match types by primary market ........................................62

Chart: Most commonly used match types by industry sector.......................................................63




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Chart: Most commonly used match types by PPC maturity .........................................................64

Chart: Keyword quality scores.....................................................................................................65

Chart: Keyword quality scores by organization size.....................................................................66

Chart: Keyword quality scores by primary market........................................................................67

Chart: Keyword quality scores by social media use.....................................................................68

Marketer insights: Best tactics in improving quality score ...................................................................69 B2B marketers share insights in improving quality score.............................................................69

B2C marketers share insights in improving quality score ............................................................71

Step 2: Clicks......................................................................................................................................73

Chart: Average PPC clickthrough rate.........................................................................................73

Chart: Average PPC clickthrough rates by organization size.......................................................74

Chart: Average PPC clickthrough rates by primary market..........................................................75

Chart: Average PPC clickthrough rates by industry sector ..........................................................76

Chart: Average PPC clickthrough rates by social media use.......................................................77

Chart: Average cost-per-click ......................................................................................................78

Chart: Average cost-per-click by organization size......................................................................79 Chart: Average cost-per-click by primary market .........................................................................80

Chart: Average cost-per-click by industry sector .........................................................................81

Chart: Percentage of bad, unwanted or irrelevant clicks..............................................................82

Chart: Percentage of bad, unwanted or irrelevant clicks by organization size.............................83

Chart: Percentage of bad, unwanted or irrelevant clicks by primary market................................84

Chart: Percentage of bad, unwanted or irrelevant clicks by industry sector.................................85

Chart: Percentage of total inbound traffic from PPC....................................................................86

Chart: Percentage of total inbound traffic from PPC by organization size ...................................87

Chart: Percentage of total inbound traffic from PPC by primary market ......................................88

Chart: Percentage of total inbound traffic from PPC by industry sector.......................................89

Chart: Percentage of total inbound traffic from PPC by social media use....................................90

Step 3: Conversions............................................................................................................................91

Chart: Defining a conversion .......................................................................................................91

Chart: Defining a conversion by organization size.......................................................................92

Chart: Defining a conversion by primary market ..........................................................................93

Chart: Defining a conversion by industry sector ..........................................................................94

Chart: Defining a conversion by social media use .......................................................................95

Chart: Average PPC conversion rate...........................................................................................96

Chart: Average PPC conversion rates by conversion definition...................................................97

Chart: Average PPC conversion rates by organization size ........................................................98

Chart: Average PPC conversion rates by primary market ...........................................................99

Chart: Average PPC conversion rates by industry sector ..........................................................100

Chart: Average PPC conversion rates by social media use.......................................................101

Chart: Average cost per conversion...........................................................................................102

Chart: Average cost-per-conversion by organization size..........................................................103

Chart: Average cost-per-conversion by primary market.............................................................104

Chart: Average cost-per-conversion by industry sector .............................................................105




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Chart: Average cost-per-conversion by social media use..........................................................106

Chart: Percent of total leads generated from PPC.....................................................................107

Chart: Percent of total leads generated from PPC by organization size ....................................108

Chart: Percent of total leads generated from PPC by primary market .......................................109

Chart: Percent of total leads generated from PPC by industry sector........................................110

Chart: Quality of leads generated from PPC..............................................................................111 Chart: Quality of leads generated from PPC by organization size .............................................112

Chart: Quality of leads generated from PPC by primary market ................................................113

Chart: Quality of leads generated from PPC by industry sector.................................................114

Chart: Quality of leads generated from PPC by PPC maturity...................................................115

PPC tactics – Optimizing every stage of the game for paramount returns................... 116

The effectiveness of PPC tactics ......................................................................................................116

Chart: The effectiveness of PPC tactics ....................................................................................116

Chart: Very effective PPC tactics by organization size ..............................................................117

Chart: Very effective PPC tactics by primary market .................................................................118

Chart: Very effective PPC tactics by industry sector..................................................................119

Marketer insights: PPC successes and challenges...........................................................................120

B2B marketers share insights on their greatest successes and challenges with PPC...............120

B2C marketers share insights on their greatest successes and challenges with PPC...............122

Chapter 2: PPC Resources................................................................................................. 123

PPC Resources.................................................................................................................... 124

Majority of online marketers practicing tactics in-house....................................................................124

Chart: Online marketing resources............................................................................................124

Chart: Online tactics done in-house by organization size ..........................................................125

Chart: Online tactics done in-house by primary market .............................................................126 Chart: Online tactics done in-house by industry sector..............................................................127

Web analytics programs provide premium insights for PPC .............................................................129

Chart: The effectiveness of PPC tools .......................................................................................129

Chart: The effectiveness of PPC tools by organization size ......................................................130

Chart: The effectiveness of PPC tools by primary market ......................................................... 131

Chapter 3: Mobile search.................................................................................................... 132

Mobile search ...................................................................................................................... 133

The current impact of mobile search.................................................................................................133

Chart: The current impact of mobile search...............................................................................133

Chart: Receiving a great impact from mobile search by organization size.................................134

Chart: Receiving a great impact from mobile search by primary market....................................135

Chart: Receiving a great impact from mobile search by industry sector....................................136

Chart: Receiving a great impact from mobile search by social media use.................................137

The expected future impact of mobile search ...................................................................................138

Chart: The expected future impact of mobile search .................................................................138

Chart: Expecting to be greatly impacted by mobile search by organization size .......................139




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Chart: Expecting to be greatly impacted by mobile search by primary market ..........................140

Chart: Expecting to be greatly impacted by mobile search by industry sector ...........................141

Chart: Expecting to be greatly impacted by mobile search by social media use........................ 142

Chart: Mobile media users within age and gender.....................................................................143

Chapter 4: Local search...................................................................................................... 144

Local Search ........................................................................................................................ 145

Local search currently having a significant impact............................................................................145

Chart: The current impact of local search..................................................................................145

Chart: Receiving a great impact from local search by organization size....................................146

Chart: Receiving a great impact from local search by primary market.......................................147

Chart: Receiving a great impact from local search by industry sector .......................................148

Chart: Receiving a great impact from local search by social media use ....................................149

Local search has reached maturity as a marketing tactic .................................................................150

Chart: The expected future impact of local search.....................................................................150

Chart: Expecting to be greatly impacted by local search by organization size...........................151

Chart: Expecting to be greatly impacted by local search by primary market..............................152

Chart: Expecting to be greatly impacted by local search by industry sector..............................153

Chart: Expecting to be greatly impacted by local search by social media use...........................154

Local search tactics ..........................................................................................................................155

Chart: Use of local search tactics ..............................................................................................155

Chart: Use of local search tactics by organization size..............................................................156

Chart: Use of local search tactics by primary market.................................................................157

Chart: Use of local search tactics by industry sector .................................................................158

Chart: Use of local search tactics by social media use ..............................................................159

Chapter 5: The Search Engine Market .............................................................................. 160

State of the search market ................................................................................................. 161

Google holds their place at the top of the search market ..................................................................161

Chart: Core search report - share of searches ..........................................................................161

Chart: Core search report - volume of searches........................................................................162

Chart: Search engine market share - spend..............................................................................163

Bing and Yahoo! alliance aims to even the playing field ...................................................................164

Chart: % Change in total searches by search engine for 2009 ..................................................164

Chart: % Change in unique searches by search engine for 2009..............................................165

Chart: % Change in searches per search engine user by search engine for 2009....................166

Search and social partnerships.........................................................................................................167 Chart: Total unique visits to search engines and social sites for 2009-2010 .............................167

Chapter 6: Agency Perspectives ....................................................................................... 168

The agency perspective...................................................................................................... 169

Increasing client budgets .................................................................................................................. 169

Chart: Expected changes in Client's PPC budgets ....................................................................169

Agencies rank the effectiveness of PPC tactics ................................................................................170




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Chart: The efficiency of PPC tactics – agency perspective........................................................170

Agencies' clients performance in quality score .................................................................................171

Chart: Average quality scores – agency perspective.................................................................171

Agency insights: PPC successes and challenges.............................................................................172

Agencies share insights on their greatest successes and challenges with PPC........................172

Appendix .............................................................................................................................. 175

Appendix 1 - Glossary.......................................................................................................................175

Appendix 2 — Demographic Data for 2011 Search Marketing Benchmark Survey ..........................184

Chart: Organization size of survey respondents........................................................................184

Chart: Organization type of survey respondents........................................................................185

Chart: Primary target audience of survey respondents..............................................................186

Chart: Industry sector of survey respondents ............................................................................187

Appendix 3 - Research Partners and Other Data Sources Referenced ............................................ 188

Research partners ............................................................................................................................188

Referenced resources.......................................................................................................................189




2



DIRECTOR'S NOTE

Welcome to MarketingSherpa's 2011 Search Marketing Benchmark Report – PPC Edition.

When we began planning the 7th

annual edition of this report, we realized that the sponsored search

advertising landscape was about to experience a dramatically more competitive year – much more so than

in recent years. It also became clear that the marketing community would need a comprehensive study

based solely on PPC research to support their campaign decisions, as they face new challenges within the

upcoming year. It also became abundantly clear that the amount of valuable research needed to cover this

and the new terrain of organic search would be enough to fill two benchmark reports – literally!

So, for the first time ever, the Search Marketing Benchmark Report is being published in two separate

editions. The PPC Edition provides all-new benchmark research and insights exclusively on the topic of PPC.

The companion SEO Edition focuses exclusively on the topic of search engine optimization. The goal of each

edition is to help you better understand what works in search engine marketing today.

PPC Edition Highlights

x Primary research survey providing the collective wisdom of 2,194 search marketers

x Benchmarks on PPC budgets, objectives, tactics and metrics

x The current and expected future impact of mobile and local search

x Search agencies provide their unique prospective on client PPC campaigns

x An overview of the search engine market from industry leading sources

This benchmark report is packed with useful information including 147 charts and analytical commentary,

hundreds of insights from search marketers and more. This information is actionable and highly necessary

to remain competitive in a quickly-evolving paid search landscape.

As always, we welcome your comments and look forward to hearing from you.

Best regards,

Sergio Balegno

Research Director, MarketingSherpa

@SergioBalegno




3



EXECUTIVE SUMMARY

Optimizing PPC campaigns from keywords to conversions

Between increased competition, the growth of social media, and the impact of mobile search, local search

and search partnerships, remaining a threat in the PPC arena will prove to be a continuous challenge in

2011. In order to achieve optimal impact, organizations will be challenged to execute the latest tactics and

develop more sophisticated processes from keywords to conversions, or else face being a powerless

contender in a losing battle.

Even though PPC has matured as a marketing tactic, the majority of organizations are surprisingly informal

with their execution of PPC. In order to receive paramount returns from this impactful tactic, organizations

are challenged to formalize their PPC processes from keywords to conversions.

Organizations are increasing PPC budgets for 2011 in part because of its effectiveness towards achievingessential business objectives like increasing lead generation, website traffic and online sales revenue. With

these increased budgets, organizations will face increased competition, again making it even more

important to formalize their processes and become more efficient PPC marketers.

The growing traffic and popularity of various social media sites now compete with the search engines.

However, search engines are still receiving billions of searches per month and are continually releasing

innovations that improve search experiences. Social marketing is commonly being integrated into SEO

campaigns for improvements on the organic side and this report will reveal the surprising impact that social

marketing can have on PPC campaigns.

Two areas where search engines are releasing innovative improvements on the paid side include mobile

and local search. What is the current impact of these innovations, and how will they impact organizations in

the future? These key questions will be answered in this report.

Organizations will find that the key to success in today's PPC market and beyond is to take the necessary

actions to optimize for the latest PPC innovations and develop a more sophisticated approach by

formalizing PPC processes at every stage of the game; from keywords to conversions. In this first edition

PPC benchmark report, you'll find plenty of data on these topics, as well as valuable insights from PPC

marketers and agencies on their strategies, challenges and successes.

As always, we thank you for your interest in our research, and look forward to your feedback and stories of

success.

Best regards,

Jen Doyle

Senior Analyst, MarketingSherpa

@JenLDoyle




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THE STATE OF PPC

If you're in the business of PPC, you understand the importance of staying abreast of the many changes that

occur from increased competition to new PPC innovations and features to social media's impact on search.

The constantly evolving environment of PPC requires a sophisticated level of execution for the practices

involved in this tactic. This section will cover PPC maturity, perceptions of PPC at budget time and its

effectiveness, social media's impact on PPC performance, the impact from search innovations in mobile and

local search, as well as search partnerships.

PPC MATURITY

CHART: PPC MATURITY Q. Please select the statement below that best describes the process your organization uses to perform paid

search (PPC) practices.

The majority of organizations are surprisingly informal with the processes they use to execute this impactful

marketing tactic. In this year's study, 59% of organizations indicated that they do not have a formal process

they routinely perform for PPC. This is surprising, not only because of the level of sophistication PPC

requires, but also because since it can require significant investments to cover the price of clicks, it would

be expected that most organizations would execute this tactic in a highly formal manner. Additionally, there

are a number of tools available to organizations to aid in this process.

In order to achieve the greatest success from their PPC campaigns, organizations are challenged to become

more sophisticated with their PPC practices by formalizing their processes.

We have a formal

process we

routinely perform

41%

We have an

informal process

we randomly

perform

37%

We have no

process for

performing this

22%

Source / Methodology: MarketingSherpa Search Marketing Benchmark Survey / Fielded April, 2010 N=2,194




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PERCEPTIONS OF PPC AT BUDGET TIME

CHART: PERCEPTIONS OF PPC AT BUDGET TIME Q. Which statement best describes how paid search (PPC) is perceived by your organization at budget time?

This report includes a comprehensive section devoted to PPC budgets, including PPC's share of the online

budget, expected changes in PPC budgets for 2011, actual PPC budgets by organization size and industry,

and more. What this chart displays is the perceptions of PPC at budget time. The verdict is clear – the

majority of organizations perceive PPC as an effective tool for producing ROI, with 77% of organizations

indicating that PPC is either producing measurable ROI or that PPC is a promising tactic that will eventually

produce ROI. Organizations are acting on these perceptions with increased budgets.

With increased PPC budgets, organizations will be more enabled to raise bids and coverage for their PPC

ads. This increased level of competition challenges organizations to formalize PPC processes and become

more efficient at identifying new keyword opportunities, improving quality score and increasing

clickthrough and conversion rates to avoid getting priced out of the game, or not using their spend to its

greatest potential.

PPC is producing

measurable ROI.

Let's increase

budget liberally forcontinuous

improvement.

44%

PPC is a promising

tactic and will

eventually produce

ROI. Let's increase

budget but do it

conservatively.

33%

The value of

PPC is unknown

and something

we do only as

time permits.

Why invest

more?

15%

PPC is not on

our radar. Let's

keep it that

way.

8%





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PERCEPTIONS ON THE MOST EFFECTIVE PPC OBJECTIVES

CHART: THE EFFECTIVENESS OF PPC OBJECTIVES Q. In your experience, how effective has paid search (PPC) been at accomplishing the following marketing

objectives for your organization?

PPC can require a significant investment of both time and money, but when executed effectively, the

rewards are well worth it. PPC has been rated as a very effective tactic in achieving increased lead

generation, website traffic, increased online sales revenue and increased brand or product awareness,

making this an important tactic for B2B and B2C organizations alike.

It's possible that the perception of PPC's effectiveness for increasing offline sales revenue is a result of

difficulties in tracking the original source(s) of offline sales. Additionally, the improvements PPC has on

website traffic and increased brand or product awareness will lead to an increase in offline sales revenue.

The effectiveness of PPC in improving brand and product reputation or public relations is undervalued, with

only 19% and 6% of organizations indicating that PPC was a very effective tactic in achieving these

objectives, respectively. PPC can be used to improve brand or product reputation and improve public

relations. Having a PPC ad appear above a direct competitor's ad conveys authority on the paid side of

search. Additionally, PPC can be utilized to address any negative press that may appear on search results

pages. These are just a couple of examples of how PPC can be used to improve reputation and PR.

6%

19%

22%

34%

40%

45%

49%

46%

53%

42%

49%

40%

49%

38%

48%

28%

36%

17%

19%

6%

13%

Improve public

relations

Improve brand or

product reputation

Increase offline sales

revenue

Increase brand orproduct awareness

Increase online sales

revenue

Increase website traffic

Increase lead

generation

Very effective Somewhat effective Not effective





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SOCIAL IMPACTS PPC PERFORMANCE

CHART: AVERAGE CLICKTHROUGH RATES BY SOCIAL MEDIA USE Q. Please indicate your organization's approximate clickthrough rate for paid search engine traffic (PPC), not

including contextual or affiliate advertising.

For the purpose of this chart, and the entirety of this report, we refer to "social media users" asorganizations who indicated that they currently integrate social media with their search campaigns, and

"non-social media users" as those organizations that do not.

When organizations discuss integrating social with search, the conversation typically centers on organic

search. What this year's study revealed is that social marketing can impact PPC performance, as well.

Social media can be a very effective tactic in improving a number of soft business objectives, such as

increasing awareness, improving brand or product reputation and improving PR, along with a number of

hard business objectives. The improvements social marketing has on these soft metrics, however, is what

impacts the performance of PPC campaigns.

When a brand has an increased awareness and improved reputation and PR, search engine users are more

likely to click through from their PPC ads because they may have already heard of the brand, and may

already have a positive impression of this brand from things they've heard about it through social media.

Organizations that integrate social media with search campaigns experience improvements to PPC

campaigns in other key areas over organizations who do not integrate social media – all of which will be

reviewed in this report.

6%

3%

Average clickthrough rate

Social Media Users Non-Social Media Users







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LOCAL SEARCH HAS REACHED MATURITY AS A MARKETING TACTIC

CHART: THE IMPACT OF LOCAL SEARCH How do you think local search is currently impacting your business, and how do you think it will impact your

business in the next 1-5 years?

This chart shows the current level of impact local search is having on organizations in comparison to the

level of impact mobile search is expected to have on organizations within the next 1 to 5 years.

Much like mobile search, the majorities of organizations are both currently having some level of impact

from local search and expect to be impacted within the next 1 to 5 years.

The difference in the impact of local search is that the expected future impact does not vary greatly from

the current level of impact. When considering a great level of impact, the expected future impact only

increases by 11% over the current level of impact. When considering a mid-level of impact, the expected

future impact actually decreases by 3%.

This indicates that organizations perceive local search as a mature marketing tactic, and that it has reached

its potential for level of impact. Local search was introduced to the search market earlier than mobile

search, so the difference in maturity between these two tactics is expected.

In this report, we will analyze the impact of local search on various types of organizations and the use of

local search tactics.

27%

35%

37%

30%

34%

36%

Great level of impact Mid level of impact No impact

Current impact Expected future impact





10



SEARCH PARTNERSHIPS

The search engine market has recently undergone significant changes. For many years, Google has

dominated the space; however, the partnership of Bing and Yahoo! aims to make the search market a race

of two competing key players. In the upcoming months, the search alliance between Yahoo! and Bing is

planned to affect organizations with the transition of marketing on Yahoo! and Bing separately to

advertising on both search engines through one interface.

How does this alliance compete with Google's market share? In this report, you will receive data from

industry leading sources on the state of the search market including changes in search volume over the last

year for Bing and Yahoo!, and how they compare to Google as well as other search engines.

Social media's popularity growth has forced search engines to act more quickly. When social media began

offering search capabilities that displayed results as they were being published, search engines knew they

had to react. Search engines began partnering with social media sites to deliver real time search, which is

now available on Google, Yahoo! and Bing.

These partnerships are increasing the power of search engines and delivering more relevant, complete and

up-to-date results than ever before. The delivery of improved search engine advertiser experiences and

search user experiences, as a result of search and social partnerships, will solidify search's place in the

marketing mix for many years to come.




11



CHAPTER 1: PPC BENCHMARKS

This report begins with PPC benchmarks because this is the most pertinent data to many organizations. You

need to know if your PPC budget plans are in line with the competition in your industry or with otherorganizations of your size and target market. You also need to know how your organization's performance

in various PPC metrics compares to those of other organizations in your industry, of your size, target

market, etc. You also need to know what the latest best PPC practices are so that they can be employed to

your benefit.

This first chapter of the 2011 Search Marketing Benchmark Report – PPC Edition will deliver in all of these

key areas, as well as provide you with insights collected during this study from other PPC marketers

candidly explaining their experiences with PPC.

Throughout this chapter, and for the entirety of this report, we are using the following definitions as

breakouts.

We are defining social media users as the respondents who indicated that they integrate their social media

tactics with their search campaigns, and the non-social media users as those who do not.

We are defining the following stages of PPC maturity: Phase I: Trial as those respondents who had no

repeatable process for performing PPC; Phase II: Transition as those respondents who had an informal

process that was randomly performed for PPC; and Phase III: Strategic as those respondents who had a

formal process for PPC that was routinely performed.




12



BUDGETING FOR PPC

In this section, we take a deep look into online marketing budgets and budgeting for SEO, including online

marketing's share of the overall budget, online budget allocation, SEO budget allocation, expected changes

in SEO budgets and actual dollar amounts of SEO budgets.

ONLINE MARKETING BUDGETS

CHART: ONLINE MARKETING'S SHARE OF THE BUDGET Q. What percentage of your organization's total marketing budget is allocated to online marketing tactics –

including personnel, media, and other direct costs of online marketing?

The majority of our respondents indicated that they were spending most of their marketing budgets offline,

with 64% of them indicating that they invest 30% or less of their total marketing budget into online tactics.

Budget, however, may not be an indication of participation level. In general, online marketing tactics tend

to be more cost effective than offline tactics, requiring less of an investment. Organizations may beattempting to accomplish what they can online with the least possible cost by adding online marketing

responsibilities to existing staff. With offline marketing tactics, costs are usually fixed and unavoidable.

< 10%

18%

10-20%

28%

21-30%

18%

31-40%

5%

41-50%

8%

51-60%

3%

61-70%

3%

71-80%

6%

81-90%

5%

91-100%

6%





13



CHART: ONLINE MARKETING BUDGET ALLOCATION

Q. What percentage of your online marketing budget is allocated to each of the following tactics – including

personnel, media and other direct costs?

When looking at the online marketing budget, it makes perfect sense that websites top the list. The cost

and man hours required to design a website can be staggering. While many organizations don't require a

redesign of their website every year, the cost of those who did this year was significant enough to make

website's share of our respondent's budgets the greatest.

It's not surprising that paid search (PPC) and email came in above SEO. With PPC, there are significant costs

for clicks and agency costs. With email, there may be costs for list rental, email design, content creation and

email deployment.

The fact that SEO and social media are taking up less of the online marketing budget is a plus for these

channels. Both can be very cost effective, but generally require some financial investment and a

considerable investment of man hours.

5%

5%

8%

14%

15%

18%

25%

Other online marketing

Online display

advertising

Social media

Search engine

optimization (SEO)

Email

Paid search (PPC)

Website

Overall Average





14



CHART: ONLINE MARKETING BUDGET ALLOCATION BY ORGANIZATION SIZE

5%

10%

4%

9%

17%

22%

22%

5%

7%

5%

12%

16%

20%

26%

5%

4%

10%

17%

14%

17%

26%


Online displayadvertising

Social media

Search engine

optimization (SEO)

Email

Paid search (PPC)

Website

Sm (<100 emp) Med (100-1,000 emp) Lg (>1,000 emp)





15



CHART: ONLINE MARKETING BUDGET ALLOCATION BY PRIMARY MARKET

5%

5%

10%

17%

14%

15%

26%

5%

6%

8%

13%

13%

23%

23%

4%

5%

7%

14%

16%

17%

27%



Social media

Search engine

optimization (SEO)

Email

Paid search (PPC)

Website

Businesses (B2B) Consumers (B2C) Both (B2B & B2C)





16



CHART: ONLINE MARKETING BUDGET ALLOCATION BY INDUSTRY SECTOR

3%

5%

8%

12%

13%

20%

27%

4%

4%

9%

14%

12%

26%

23%

5%

7%

8%

14%

16%

21%

22%

4%

5%

9%

17%

16%

16%

24%



Social media

Search engine

optimization (SEO)

Email

Paid search (PPC)

Website

Business / consumer services Computer hardware / software

Retail / ecommerce Education / healthcare





17



CHART: ONLINE MARKETING BUDGET ALLOCATION BY PPC MATURITY

5%

7%

5%

12%

14%

29%

19%

5%

5%

6%

15%

13%

22%

23%

4%

5%

10%

13%

18%

10%

30%


Online display

advertising

Social media

Search engine

optimization (SEO)

Email

Paid search (PPC)

Website

Phase I: Trial Phase II: Transition Phase III: Strategic





54



PPC METRICS

It is critical for organizations to understand industry benchmarks for various performance metrics to

measure their progress against. In this section, you will be provided with over 50 charts of important PPC

metrics encompassing each stage of the game from keywords to conversions. This section is broken out into

three steps based on the way a search engine user executes their search activities; they first enter

keywords, then clickthrough, and then convert. For advertisers, however, all steps from keywords to

conversions require continued maintenance and optimization.

STEP 1: KEYWORDS

Effective PPC campaigns begin with excellent keyword targeting. In this section, you will receive metrics on

number of target keywords, commonly used match types and quality scores for various types of

organizations. You will also receive insights from other PPC advertisers on the best tactics in improving

quality score.

CHART: NUMBER OF TARGET PPC KEYWORDS

Q. Approximately how many key terms do your organization currently bid on?

The majority of organizations are targeting 500 keywords or less for their PPC campaigns and this may be a

result of the bandwidth of their PPC teams. The lower the quantity of key terms that an organization bids

on, the amount of workload that is required to manage and optimize campaigns decreases. This could also

be a result of budgetary constraints, as the more keywords an organization bids on, the need for increased

budgets becomes greater.

10%

4%

2%

5%

10%

11%

23%

34%

More than 50,000

More than 20,000

More than 10,000

5,001 - 10,000

1,001 - 5,000

501 - 1,000

101 - 500

1 - 100

Percent of respondents





55



CHART: NUMBER OF TARGET PPC KEYWORDS BY ANNUAL PPC BUDGETS

The annual PPC budgets in the above chart represent search engine, contextual or affiliate advertising and

does not include in-house staff salaries. This chart demonstrates the relationship between number of target

keywords and PPC budgets. The number of keywords an organization targets increases as PPC budgets

increase.

81%

43%

50%

22%

6%

6%

0%

0%

13%

43%

50%

44%

35%

28%

11%

9%

0%

0%

0%

22%

6%

22%

18%

5%

6%

14%

0%

11%

47%

44%

68%

82%

More than 50,000

More than 20,000

More than 10,000

5,001 - 10,000

1,001 - 5,000

501 - 1,000

101 - 500

1 - 100

Less than $49,999 $50,000 - $99,999

$100,000 - $499,999 $500,000 or more





56



CHART: NUMBER OF TARGET PPC KEYWORDS BY ORGANIZATION SIZE

Because the number of keywords organizations are targeting with PPC is relative to the amount of PPC

budgets, and small organizations tend to have lower PPC budgets than medium- and large-sized

organizations, it is expected that small organizations would target fewer keywords on average than medium

or large-sized organizations.

17%

8%

6%

8%

11%

19%

17%

14%

17%

0%

0%

11%

8%

6%

28%

31%

4%

4%

2%

2%

10%

10%

24%

43%

More than 50,000

More than 20,000

More than 10,000

5,001 - 10,000

1,001 - 5,000

501 - 1,000

101 - 500

1 - 100






57



CHART: NUMBER OF TARGET PPC KEYWORDS BY PRIMARY MARKET

B2C organizations tend to have larger PPC budgets and more positive perceptions of the effectiveness of

PPC towards achieving various business objectives than B2B organizations or organizations with mixed

primary targets. The fact that B2C organizations are the most likely to be targeting more than 50,000

keywords in their PPC campaigns is a result of their budgets and perceptions of PPC.

9%

3%

0%

3%

6%

14%

23%

43%

15%

7%

0%

9%

7%

15%

20%

26%

7%

3%

5%

4%

14%

7%

25%

36%

More than 50,000

More than 20,000

More than 10,000

5,001 - 10,000

1,001 - 5,000

501 - 1,000

101 - 500

1 - 100






58



CHART: NUMBER OF TARGET PPC KEYWORDS BY INDUSTRY SECTOR

It's surprising that organizations in the computer hardware / software sector are the most likely to betargeting 1–100 keywords for their PPC campaigns. These organizations generally require a large number of

keywords to cover a range of products, features and targets.

Earlier in this chapter, we learned that organizations in the computer hardware / software sector were the

least likely to indicate that PPC was producing measurable ROI, and to increase budget liberally for

continuous improvement. Perhaps these organizations would receive better returns from PPC by expanding

their targets.

6%

12%

0%

0%

6%

6%

41%

29%

17%

4%

0%

9%

9%

22%

9%

30%

5%

2%

7%

7%

14%

7%

20%

39%

16%

6%

3%

0%

9%

6%

34%

25%

More than 50,000

More than 20,000

More than 10,000

5,001 - 10,000

1,001 - 5,000

501 - 1,000

101 - 500

1 - 100







73



STEP 2: CLICKS

Once a search engine user conducts a search a specified keyword, the next step is to click through on the

ad(s) that are most relevant to what they're looking for, or entice them in some other way. For advertisers,

this means executing a continual process of differentiating their ads from the competition on the search

engine results pages, refining account structure, optimizing ad copy and testing various positions to achieve

their greatest potential for clickthrough rates. In this section, we'll analyze PPC clickthrough rates, cost-per-

click, percentages of bad, unwanted or irrelevant clicks and total percentages of inbound traffic from PPC

for various types of organizations.

CHART: AVERAGE PPC CLICKTHROUGH RATE Q. Please indicate your organization's approximate clickthrough rate for paid search (PPC) traffic, not


This chart represents the overall average clickthrough rate for all participating organizations in this year'sstudy. Overall, approximately 5% of these organizations' ads that get displayed receive a click.

Clickthrough rates can vary drastically by industry and target market among other intricacies and this

section provides you with overall averages for various types of organizations. While these metrics are

important to consider, another important measurement of an organization's performance that must be

considered is an evaluation of their own historical performance for various metrics and whether figures are

improving or declining against that history.

5%


Overall Average





74



CHART: AVERAGE PPC CLICKTHROUGH RATES BY ORGANIZATION SIZE

Large organizations with more than 1,000 employees tend to have greater brand or product awareness and

reputation than organizations of small or medium sizes. It is this increased awareness and reputation that

results in a drastically higher clickthrough rates for large organizations.

5%

4%

8%







75



CHART: AVERAGE PPC CLICKTHROUGH RATES BY PRIMARY MARKET

B2B organizations receive a clickthrough rate that is approximately 75% lower than B2C organizations and

50% lower than organizations with mixed primary targets on average.

This is likely a result of two factors. First, this could be an indication of an educated audience for B2B

organizations. Other businesses may be more aware of the fact that PPC ads are sponsored and may rely

more on organic results. Additionally, B2B organizations may be less efficient in optimizing their campaigns

for higher clickthrough rates than B2C organizations or organizations with mixed primary targets.

4%

7%6%







76



CHART: AVERAGE PPC CLICKTHROUGH RATES BY INDUSTRY SECTOR

Organizations in the business or consumer services sector are the most likely to achieve the highest

clickthrough rates on their PPC ads. On average, 8% of the ads shown for organizations in the business or

consumer services sector receive clicks.

It is common for organizations in the services sector to have highly-localized businesses and stand to

receive high clickthrough rates through effective execution of geo-targeting.

8%

6%

7%

2%








96



CHART: AVERAGE PPC CONVERSION RATE Q. What is your organization's conversion rate for paid search (PPC) traffic?

When considering PPC advertising, a conversion rate is the number of conversions an advertiser receives on

their ads in proportion to the number of clicks. On average, organizations are converting approximately 9%

of clicks.

Like any PPC metric, conversion rates can vary dramatically depending on industry, primary market, etc. and

organizations need to measure their results based on their own historical performance along with industry

benchmarks.

9%

Overall Average

Paid search traffic





97



CHART: AVERAGE PPC CONVERSION RATES BY CONVERSION DEFINITION

As we learned in the previous section, conversions can take place in a variety of formats based on an

organization's primary goals, and the above chart provides average conversion rates for various definitions.

The definition receiving the highest conversion rate is the action of a web visitor adding an item to an

online shopping cart. This is also the action that requires the lowest level of commitment. If web visitors

add an item to an online shopping cart, they are not agreeing to purchase that item. They are not

necessarily signing up to be contacted by a sales representative. They are not even necessarily opting into

an email list. It is this low level of commitment that causes the higher level of conversion.

10%9%

10%

15%

Average conversion rates

New lead created Online sale completed

Email address aquired Item added to online shopping cart





98



CHART: AVERAGE PPC CONVERSION RATES BY ORGANIZATION SIZE

On average, large organizations have significantly higher conversion rates than small- or medium-

sizedorganizations. Earlier in this chapter, we learned that large organizations were also likely to have

significantly higher clickthrough rates on their PPC ads.

It is because large organizations tend to have greater brand or product awareness and more established

reputations than small- or medium-sizedorganizations that they receive higher clickthrough and conversion

rates.

9% 9%

12%







99



CHART: AVERAGE PPC CONVERSION RATES BY PRIMARY MARKET

On average, B2B organizations tend to have the lowest conversion rates when being compared to B2C

organizations or organizations with mixed primary targets.

Other businesses may be more aware of the sales processes that typically begin for prospects post

conversion and may not be ready to be contacted by a sales representative. If a web visitor has this

knowledge, it requires a higher level of commitment to convert. As we learned when analyzing conversion

rates by various definitions, the greater the level of commitment that is required from the web visitor, the

lower the conversion rate tends to be.

8%

12%

9%







100



CHART: AVERAGE PPC CONVERSION RATES BY INDUSTRY SECTOR

11%

8%8%

16%








102



CHART: AVERAGE COST PER CONVERSION Q. Please indicate your organization's approximate cost-per-conversion from paid search (PPC) traffic, not


Cost-per-conversion is the amount an organization pays for each web visitor that converts on their site. For

PPC advertising, organizations are paying approximately $43.44 per conversion on average.

Organizations may be willing to pay greater or lower amounts per conversion depending on the average

purchase amount or deal size of each conversion. Additionally, cost-per-conversion can vary greatly

depending on industry, target market, etc.

$43.44

Average cost-per-conversion

Overall Average





107



CHART: PERCENT OF TOTAL LEADS GENERATED FROM PPCQ. Please indicate your organization's approximate percentage of total leads generated from paid search

(PPC) traffic, not including contextual or affiliate advertising.

The results of organization's percentages of leads generated from PPC correspond with the percentages of

inbound website traffic. The relationship between these two metrics indicates that PPC traffic on average

tends to convert at a similar rate as website traffic from other sources, such as organic search, direct visits

or other visits generated from marketing campaigns, such as email.

16%

Percent of leads generated from PPC

Overall Average





108



CHART: PERCENT OF TOTAL LEADS GENERATED FROM PPC BY ORGANIZATION SIZE

On average, large organizations receive the greatest percentage of their leads from PPC when compared to

organizations of small or medium size. Large organizations also tend to have a lower cost-per-click and

higher percentage of total inbound traffic from PPC in comparison.

Because large organizations have a lower cost-per-click, they are able buy more traffic from PPC for the

same cost as small- or medium-sized organizations that tend to have a higher cost-per-click, and thus, PPC

represents a greater percentage of their total inbound traffic. It is natural for an increased percentage of

total inbound traffic to cause a greater percentage of total leads generated.

16%

15%

19%







109



CHART: PERCENT OF TOTAL LEADS GENERATED FROM PPC BY PRIMARY MARKET

The above chart is another representation of the relationship between the percentage of inbound traffic

generated from PPC and the percentage of leads generated from PPC. When we analyzed inbound traffic,

we learned that B2C organizations were the most likely to receive a greater percentage of their inbound

traffic from PPC and from the above chart we learn that these organizations are also the most likely to be

receiving a larger percentage of total leads generated from PPC.

15%

18%

16%







110



CHART: PERCENT OF TOTAL LEADS GENERATED FROM PPC BY INDUSTRY SECTOR

16%

18%

15%

20%








111



CHART: Q UALITY OF LEADS GENERATED FROM PPCQ. How would you rate the quality of leads generated from paid search (PPC)?

Organizations have a need not only for a high volume of leads, but also for leads of high quality and the

definition of a high quality lead will vary widely from one organization to another. The perception on the

quality of leads generated from PPC as a whole is that leads generated from PPC are of mixed quality.

In the 2011 Search Marketing Benchmark Report – SEO Edition, we learned that the majority of

organizations also perceive the lead quality from organic search to be mixed.

The mixed quality of leads generated from PPC is less of a reflection on this marketing tactic as it is on the

nature of modern buying cycles.

18%

69%

13%

The quality is low The quality is mixed These are our highest quality

of leads

Percent of respondents





112



CHART: Q UALITY OF LEADS GENERATED FROM PPC BY ORGANIZATION SIZE

21%

66%

13%

20%

71%

9%7%

78%

15%


of leads






113



CHART: Q UALITY OF LEADS GENERATED FROM PPC BY PRIMARY MARKET

The level of response from B2C organizations in receiving their highest quality of leads from PPC far exceeds

the level of response from B2B organizations or organizations with mixed primary targets in the same

category.

B2C organizations are also the most likely to perceive PPC as a very effective tactic in achieving a number of

business objectives including increased website traffic, increased brand or product awareness, improved

reputation, and increased sales. Because of the benefits B2C organizations perceive from PPC towards these

business objectives, they are also more likely to perceive the leads generated from PPC as the highest in

quality.

9%

73%

8%

17%

60%

22%

16%

76%

8%


of leads






114



CHART: Q UALITY OF LEADS GENERATED FROM PPC BY INDUSTRY SECTOR

20%

63%

17%16%

77%

7%

20%

63%

16%

3%

79%

17%


of leads







115



CHART: Q UALITY OF LEADS GENERATED FROM PPC BY PPC MATURITY

Organizations in the strategic phase of PPC maturity are the most likely to perceive leads from PPC as the

highest in quality and also the least likely to perceive leads from PPC as low quality. Because these

organizations have formal processes for PPC that can be routinely performed, they are likely more efficient

in their keyword research and targeting practices. Increased efficiencies in these areas of PPC can lead to an

improvement in the quality of traffic and leads generated.

16%

74%

11%

21%

63%

16%13%

65%

21%


of leads

Phase I: Trial Phase II: Transition Phase III: Strategic




Documents

2011 Search Marketing - Benchmark Report (PPC)