The state of Paid Search 3.0

State of Paid Search Report - Q2 2013 www.thesearchagency.com 1

State of Paid Search Report - Q2 2013

State of Paid Search Report - Q2 2013

July 2013

http://www.thesearchagency.com


Contents

Introduction 3Executive Summary 3Research Methodology 4Overall Trends in Paid Search 4Trends in Paid Search By Search Engine 7

Impressions 7Clicks 8CTR 8CPCs 9CTR by Device by Search Engine 9CPC by Device by Search Engine 10Share Totals by Search Engine 11Search Engine Total Share by Device 13Summary 15

Overall Trends by Device 15Desktop Spend 15Tablet Spend 15Smartphone Spend 16Impressions 17Clicks 19CTR 21CPC 21CPC Discount by Device 22Click Share by Device by Search Engine 23Spend Share by Device by Search Engine 25Summary 26

Ad Format 27PLA Clicks 28PLA CTR 28PLA CPC 29PLA Performance by Device 29PLA CPC Discount from Desktops – Tablets 30PLA Share of Clicks and Share of Spend 30

Trends in Paid Search Analysis by Industry 31Business Services 31Consumer Services 34Financial Services 37Real Estate and Construction 40Healthcare 43Media and Entertainment 46Retail/eCommerce 49Travel and Leisure 52

About The Search Agency 56Contact 56



Introduction

The Search Agency’s State of Paid Search Report summarizes current paid search marketing trends

across search engines, devices, and industries. Our findings and forecasts are based on year-over-year

(YoY) and quarter-over-quarter (QoQ) analyses on aggregated client data.

Executive Summary

� Overall impressions were up 19.2% across all search engines QoQ, while overall clicks declined

7.8%.

� Bing clicks were up 12.9% YoY but down 4.7% QoQ, while Google clicks were up 4.1% YoY but

down 6.7% QoQ.

� Google CPCs rose 21.2% QoQ, while Bing CPCs remained relatively unchanged.

� Google CPCs were up across all three device types QoQ, with the largest increase coming on

tablets at 26%. Q2 marks the first quarter in which tablet CPCs on Google are at a premium to

desktops, with a 1.7% difference.

� Google impressions were up 10.8% YoY and 21.4% QoQ, but the search engine experienced a

dramatic drop in CTR, falling from 3.5% to 2.7% QoQ.

� Overall, tablet clicks were down 8% QoQ, marking the first quarter in which click volume on tablets

has declined. Nonetheless, tablet click volume is still up 62% YoY.

� Bing continued to gain traction on tablets, increasing its share of clicks from 8.7% in Q1 to 10.9% in

Q2.

� Smartphones were the only device segment to show an increase in clicks in Q2 – up 1.6% QoQ.

Smartphones also delivered the largest increase in advertiser spend – up 25% QoQ.

� Retail clicks declined 7.5% YoY. Across devices, clicks declined on desktops, but increased 124.8%

on smartphones and 32.4% on tablets.

� The real estate and construction vertical saw strong click growth in Q2, with an increase of 26.1%

YoY. Much of this growth came on smartphones and tablets, where clicks were up 172.6% YoY

and 124.4% YoY, respectively.



Research Methodology

To uncover key trends for Q2 2013, we extracted client data from search engine advertising tools. Our

sample included advertisers who had fifteen consecutive months of data with The Search Agency and an

established and stable business model from Q2 2012 to Q2 2013. All results are based on U.S. campaigns

only.

To gain an in-depth understanding of paid search trends within specific business verticals, the sample of

advertisers was segmented into eight industry categories classified by Dun & Bradstreet. The industries

include: Business to Business, Consumer Services, Financial Services, Real Estate and Construction,

Healthcare, Media and Entertainment, Retail/eCommerce, and Travel and Leisure.

We measured key performance indicators (KPIs) on a YoY and QoQ basis across search engines, devices,

and seven industry-specific groups. Some KPIs, specifically impressions, clicks, and cost, were indexed

according to Q2 2012 data to more clearly represent overall trends. Therefore, all graphs indicating total

clicks and total spend represent indexed data. All other KPIs were reported as absolute values.

In all instances, “Bing” refers to the combined search marketplace of the Yahoo!—Bing search alliance.

Overall Trends in Paid Search

Impressions

Our analysis demonstrates that overall impressions increased 7.5% YoY and 20% QoQ.



Clicks

Overall search engine clicks increased 5.2% YoY but decreased 6.4% QoQ.

Spend

Overall search engine spend increased 15.8% YoY and 9.7% QoQ.



CTR

Our search engine analysis demonstrates CTR decreased 2.1% YoY and 22% QoQ.

CPC

Overall CPC across search engines increased 10% YoY and 17.3% QoQ.



Summary Overall, YoY search volume saw a healthy growth, as click traffic increased 5% and impressions increased

8% YoY. However, the relative decline in clicks QoQ tells a different story: increased impressions and

decreased clicks may indicate a shift in matching or query mapping changes at the search engine level.

This cause is most likely driven by advertiser adoption of Google’s Enhanced Campaigns. The rise in

marketplace competition caused a spike in CPCs during Q2.

Trends in Paid Search By Search Engine

Impressions

According to our data, Google’s total impressions increased by 10.8% YoY and 21.4% QoQ. Bing’s total

impressions decreased by 2.3% YoY but increased by 15.6% QoQ.



Clicks

Our analysis shows that Google’s clicks increased 4.1% YoY and Bing’s clicks increased 12.9% YoY. Total

clicks fell on both engines in Q2, dropping 7.1% on Google and 4.1% on Bing QoQ.

CTR

Google’s average CTR decreased 6% YoY and 23.1% QoQ, while Bing’s average CTR increased 15.6%

YoY and decreased 17.5% QoQ.



CPCs

According to our data, CPCs increased across both search engines YoY. Google’s average CPC increased

8.3% YoY and 21.2% QoQ, while Bing’s average CPC increased 18.9% YoY and remained relatively flat

QoQ.

CTR by Device by Search Engine Google

Our data demonstrates that CTR declined across all devices on Google. Desktop CTR decreased 6.8%

YoY and 24.1% QoQ; smartphone CTR decreased 15.6% YoY and 16.2% QoQ; and tablet CTR decreased

23.8% YoY and 26.2% QoQ.



Bing

Our analysis for Bing finds that desktop CTR increased 12.2% YoY but decreased 18.2% QoQ.

Smartphone CTR decreased dramatically, by 27.2% YoY and 28.2% QoQ. Lastly, tablet CTR dramatically

increased YoY, up 120.9%, but remained relatively flat QoQ.

CPC by Device by Search Engine Google

Our Google data shows that desktop CPCs increased both YoY and QoQ, by 9.6% and 20% respectively.

Smartphone CPCs decreased 4.9% YoY but increased 23.8% QoQ. Lastly, tablet CPCs increased 25.3%

YoY and 27.8% QoQ.



Bing

According to our Bing data, desktop CPCs increased 21.9% YoY and 1.1% QoQ. Smartphone CPCs

decreased 3.7% YoY and more dramatically QoQ, by 13.8%. Tablet CPCs increased 8.9% YoY and

remained relatively flat QoQ.

Share Totals by Search Engine Impression Share by Search Engine

Google’s impression share reached 77.1% in Q2—a 3.1% increase YoY and a 1.1% increase QoQ.



Click Share by Search Engine

Google’s click share fell to 86.9% in Q2, marking a minimal decrease YoY and QoQ.

Spend Share by Search Engine

Google’s spend share fell to 83.8% in Q2—a 2.5% decrease YoY and a 3.1% increase QoQ.



Search Engine Total Share by Device Google Impression Share by Device

In Q2, 11% of impressions on Google came from tablets, 13.7% came from smartphones, and 75.3%

came from desktops. These figures were relatively unchanged from Q1.

Bing Impression Share by Device

In Q2, 4.4% of impressions on Bing came from tablets, 8% came from smartphones, and 87.5% came

from desktops. While tablet share was relatively unchanged from Q1, impressions continued to move

from desktop to smartphones.



Google Click Share by Device

Smartphones continued to gain share on Google in Q2, while tablet share increased YoY and decreased

QoQ. Desktop click share fell to 71%, marking a 14.9% decrease YoY and a 1.2% decrease QoQ.

Bing Click Share by Device

Smartphones and tablets continued to gain click share on Bing in Q2. Desktop share fell to 83.5%—a

9.1% decrease YoY and a 3.1% decrease QoQ.



Summary

Across search engines, CTR behavior was rather similar: both search engines saw a spike during Q1 and then an

average decrease of 20% during Q2. Additionally, Google’s CPCs grew significantly QoQ, with a 21% increase,

while Bing’s CPCs remained relatively flat QoQ. This data may be a result of changes to Google’s matching

algorithm and the introduction of Enhanced Campaigns, as competition within the marketplace begins to increase.

Overall Trends by Device

Desktop Spend

Total spend on desktops increased by 1.3% YoY and 6.9% QoQ.

Tablet Spend

Total spend on tablets increased 102.2% YoY and 14.3% QoQ.



Smartphone Spend

Total spend on smartphones increased by 97.2% YoY and 22.9% QoQ.

Spend Share by Device

Desktop spend share decreased by 12.5% from 85.2% to 74.5% YoY and decreased by 2.5% from 76.5%

QoQ.

Smartphone spend share increased by 70.4% from 8.4% to 14.2% YoY and increased by 12.0% from

12.7% QoQ.

Tablet spend share increased by 74.7% from 6.4% to 11.2% YoY and increased 4.2% from 10.8% QoQ.



Impressions Desktop

Desktop impressions decreased 5.8% YoY and 19.2% QoQ.

Tablet

Tablet impressions increased 90.5% YoY and increased 21.0% QoQ.



Smartphone

Smartphone impressions increased 148.3% YoY and 24.8% QoQ.

Impression Share by Device

Desktop impression share decreased 12.4%, from 89.2% to 78.1% YoY.

Tablet impression share increased 77.9%, from 5.3% to 9.5% YoY.

Smartphone impression share increased 131%, from 5.4% to 12.4% YoY.



Clicks Desktop

Total clicks on desktops decreased 9.5% YoY and 7.8% QoQ.

Tablets

Total clicks on tablets increased 61.7% YoY but decreased 8.1% QoQ.



Smartphones

Total clicks on smartphones increased 107.3% YoY and 1.6% QoQ.

Click Share by Device

Desktop click share decreased 14%, from 84.5% to 72.7% YoY.

Tablet click share increased 53.7%, from 7.2% to 11% YoY.

Smartphone click share increased 97.1%, from 8.3% to 16.3% YoY.



CTR

Desktop CTR decreased 3.9% YoY and 22.6% QoQ.

Smartphone CTR decreased 16.5% YoY and 18.6% QoQ.

Tablet CTR decreased 15.1% YoY and 24.1% QoQ.

CPC

Smartphone CPC decreased 4.8% YoY but increased 21% QoQ.

Tablet CPC increased 25.1% YoY and 24.5% QoQ.

Desktop CPC increased 12% YoY and 15.9% QoQ.



CPC Discount by Device

The smartphone CPC discount from desktops increased from a premium of 0.3% to a discount of 14.9%

YoY.

The discount on tablet CPCs fell from 11.2% in Q2 2012 to 0.8% in Q2 2013.

Smartphone CPC Discount by Search Engine

Google CPC discount from desktop on smartphones increased YoY from -2.2% to 11.3% and decreased

QoQ from 14.1%

Bing CPC discount from desktop on smartphones increased YoY from 9.2% to 28.3% and increased QoQ

from 16.0%.



Tablet CPC Discount by Search Engine

Google

Google’s tablet CPC discount from desktop fell from an 11.1% discount to a 1.7% premium YoY and

decreased from 4.5% QoQ.

Bing

Bing’s tablet CPC discount from desktop increased from -3.3% to 7.7% YoY and increased from 5.2%

QoQ.

Click Share by Device by Search Engine Desktop

Google’s share of total clicks on desktops decreased 2% from 86.7% to 84.9% YoY.



Tablet

Google’s share of total clicks on tablets decreased from 93.9% to 89.1% YoY.

Smartphone

Google’s click share on smartphones increased from 93.4% to 94.1% YoY but fell from 94.7% QoQ.



Spend Share by Device by Search Engine Desktop

Google’s share of total spend on desktops decreased from 84.9% to 81.3% YoY but recovered from its

sharp drop-off in Q1 (78.6%).

Tablet

Google’s share of total spend on tablets decreased from 92.0% to 87.4% YoY but remained virtually flat

QoQ.



Smartphone

Google’s share of total spend on smartphones increased from 93.2% to 93.9% YoY but had a relatively

large jump QoQ, increasing from 92.3% to 93.9%.

SummaryOur analysis demonstrates that Bing’s quarterly growth in click share for smartphones and tablets grew

more rapidly than Google’s, albeit from a lower starting base. From this, we see device adoption on Bing

continues to grow, while Google’s device adoption remains steady. Declining CTR and increasing CPC is

consistent across devices on Google, which suggests that Google’s growth is steady and demonstrates

that there is no single device segment that is impacting overall performance more than the others.

Tablet click share on Bing saw consistent growth QoQ and YoY, indicating a potential investment

opportunity for marketers to push tablet campaigns on Bing.

Overall, we can conclude that it is critical for advertisers to leverage, understand, and develop a consistent

mobile strategy to better understand consumer behavior. Tablet and smartphone CPC discounts from

desktop are continuing to shrink and will shrink more dramatically after all advertisers are opted in to

Enhanced Campaigns on July 22. Demonstrated by Q2 data, the tablet CPC discount from desktops is

already shrinking on both Google and Bing.



Ad Format

PLA Spend

PLA spend increased 347.2% YoY and decreased 14% QoQ.

PLA Impressions

PLA impressions increased 208.7% YoY and decreased 38% QoQ.



PLA Clicks

PLA clicks increased 382.5% YoY but decreased 35.7% QoQ.

PLA CTR

PLA CTR increased 56.3% YoY and 3.7% QoQ.



PLA CPC

PLA CPC decreased 7.3% YoY but increased 33.8% QoQ.

PLA Performance by Device

13.1% of total PLA clicks came from tablets. Share of PLA clicks from smartphones more than tripled

QoQ and desktop clicks decreased 12.5% QoQ.



PLA CPC Discount from Desktops – Tablets

Tablet CPC discount from desktops increased 31.8% YoY, from 8.8% to 11.6%. QoQ, the discount

increased 17.1% from a discount of 10.3% in Q1.

PLA Share of Clicks and Share of Spend

The share of overall Google spend on PLAs increased 296.7% YoY, from 1.0% to 3.9%, and decreased

24% QoQ.

The share of overall clicks from PLAs increased 363.4% YoY, from 1.1% to 5.1%, and decreased 31.1%

QoQ.



Trends in Paid Search Analysis by Industry

This section details key paid search metrics within the following industries:

� Business Services: Companies that focus on the sale of products, services, or information to other

businesses.

� Consumer Services: Providers of consumer services such as directories, ratings and review sites,

and personal services.

� Financial Services: Banks, insurance companies, insurance brokers, and providers of personal

finance services.

� Real Estate and Construction: Companies engaged in real estate brokerage, ownership, develop-

ment, or management.

� Healthcare: Companies that provide health services, information, or products.

� Media and Entertainment: Producers, operators, and broadcasters of radio, television, music, and

filmed entertainment. Also includes retailers that exclusively sell entertainment-related products

and services.

� Retail/eCommerce: Companies specializing in the direct sale of consumer goods and services.

� Travel and Leisure: Companies providing travel and tourism services.

Business Services Impressions

Impressions increased 47.4% YoY and 39.2% QoQ.



Clicks

Clicks decreased 11% YoY and 8% QoQ.

CTR

CTR decreased 39.6% YoY and 33.9% QoQ.



CPC

CPC increased 25.9% YoY and 19.9% QoQ.

CPC Discount for Desktops

The smartphone CPC discount from desktops decreased from 43.1% to 240.2% YoY.

The tablet CPC discount from desktops decreased from 14.7% to 17.0%.




Tablet click share increased 65.5%, from 1.7% to 2.8% YoY.

Smartphone click share increased 683%, from 0.2% to 1.7% YoY.

Desktop click share decreased 2.5% from 98.1% to 95.6% YoY.

Consumer Services Impressions

Impressions increased 22.1% YoY but decreased 16.1% QoQ.



Clicks

Clicks increased by 6.3% YoY but decreased 10.1% QoQ.

CTR

CTR decreased 12.9% YoY but increased 7.1% QoQ.



CPC


CPC Discount from Desktop

The smartphone CPC discount from desktops increased by 101.1% YoY, from 23.8% to 47.8%, and

increased 64.3% QoQ.

The tablet CPC discount from desktops increased from a slight premium of 0.1% to a discount of 6.4%

YoY.




Tablet click share increased 62.1% YoY and 13.6% QoQ.

Smartphone click share increased 49.1% YoY and 1.2% QoQ.

Desktop click share decreased 14.2% YoY and 1.8% QoQ.

Financial Services Impressions




Clicks

Clicks increased 82.2% YoY but decreased 12% QoQ.

CTR




CPC


CPC Discount

The smartphone CPC discount from desktops decreased from a 14% discount to a 0.3% premium YoY.

Tablet CPCs remained at a premium to desktops, but decreased slightly from 19.6% to 19.3% YoY.




Tablet click share increased 26%, moving from 5.1% to 6.4% YoY.


Desktop click share decreased 3.9%, falling from 90.8% to 87.3% YoY.

Real Estate and Construction Impressions

Impressions decreased 12.4% YoY and increased 23.9% QoQ.



Clicks

Clicks increased 26.1% YoY and 2.8% QoQ.

CTR

CTR increased 44% YoY but decreased by 17% QoQ.



CPC

CPC decreased 12.7% YoY but increased 12.6% QoQ.

CPC Discount from Desktops

The smartphone CPC premium to desktops decreased dramatically, moving from 40.5% to 0.9% YoY.

Tablet CPCs grew from an 8.9% premium to desktops to a 10.8% premium YoY.




Tablet click share increased 78% YoY, but decreased 22.2% QoQ.

Smartphone click share increased 116.2% YoY and 52.7% QoQ.

Desktop click share decreased 11.5% YoY and 0.6% QoQ.

Healthcare Impressions




Clicks

Clicks increased by 48% YoY and 26.1% QoQ.

CTR

CTR increased 12.7% YoY but decreased 46.6% QoQ.



CPC

CPC increased 13% YoY and 35.1% QoQ.


Smartphone CPCs switched from a 55.8% discount from desktops to a 1.7% premium YoY.

Tablet CPCs switched from a 21.6% discount from desktops to a 28.6% premium YoY.





Smartphone click share decreased 38.6%, from 11.1% to 6.8% YoY.

Desktop click share increased 1.2%, from 82.4% to 83.4% YoY.

Media and Entertainment Impressions




Clicks

Clicks increased 10.1% YoY but decreased 12.8% QoQ.

CTR




CPC



The smartphone CPC discount from desktops decreased from 60.2% to 19% YoY.

The tablet CPC discount from desktops decreased from 21.1% to 4.5% YoY.






Desktop click share decreased 9.7%, from 83.8% to 75.6% YoY.

Retail/eCommerce Impressions

Impressions decreased 1.5% YoY but increased 23.5% QoQ.



Clicks

Clicks decreased 7.5% YoY and 7.1% QoQ.

CTR




CPC



Smartphone CPCs switched from an 8.4% premium to a 19.5% discount from desktops YoY.

The tablet CPC discount from desktops decreased from 18.9% to 8.3% YoY.




Tablet share of clicks increased 43.8%, from 8.2% to 11.7% YoY.

Smartphone share of clicks increased 143.1%, from 8.9% to 21.6% YoY.

Desktop share of clicks decreased 19.5%, from 82.9% to 66.7% YoY.

Travel and Leisure Impressions




Clicks

Clicks increased 12.9% YoY but decreased 20.7% QoQ.

CTR




CPC



The smartphone CPC discount from desktops decreased from 26.7% to 24.3% YoY.

The tablet CPC discount from desktops switched from a 5.7% discount to a 9.8% premium YoY.






Desktop click share decreased 10.3%, from 85.7% to 76.8% YoY.



About The Search Agency

The Search Agency is a global online marketing firm that combines high-tech and high-touch strategies to

help clients engage their customers online and measure ROI beyond a reasonable doubt. With a deep-

rooted history in paid search and search engine optimization (SEO), The Search Agency understands

how activity on the web intersects with search, and executes smart digital marketing strategies that

drive measurable results across multiple platforms. The company is one of the nation’s largest and

fastest growing search marketing firms—named the largest independent U.S. search marketing agency

by Advertising Age and ranked among Deloitte’s 2011 Technology Fast 500™. Founded in 2002, The

Search Agency has grown to more than 180 employees worldwide with headquarters in Los Angeles, and

additional offices in San Francisco, East Greenwich, Baltimore, London, Sydney, Toronto, and Bangalore.

Contact

Alec Green, Vice President of Marketing: [email protected]


[email protected]

Documents

The state of Paid Search 3.0