RKG Q3: Paid Search Ad Spend Surged 26 Percent Y/Y


Q3 brought more paid search growth among RKG’s clients according to the firm’s third quarter digital marketing report. Paid search ad spend on Google increased 27 percent and Bing increase ad spend rose 24 percent, for an overall growth rate of 26 percent year-over-year.  No surprise, mobile devices and product ads continue to drive paid search growth.

Google AdWords: Clicks Volume & CPCs Rise

On Google, paid clicks increased 18 percent and CPCs increased 8 percent compared to Q3 last year across RKG’s US-oriented advertisers. Mobile spend on Google saw a bump compared to a year ago when many RKG advertisers reigned in smartphone spending to improve ROI with the ushering in of enhanced campaigns. Non-brand spend on Google rose 30 percent year-over-year, spurred by rising conversion rates. Non-brand CTR also rose 8 percent compared to the previous year.

Bing Ads: Mobile Drives Volume, Keeps CPCs Flat

Bing ad spend was driven by volume; cost-per-click (CPC) remained static. Rising mobile traffic for the second consecutive quarter contributed to the higher volume while keeping the average CPC from rising. Non-brand spend on Bing rose 29 percent as click volume increased by 33 percent year-over-year.

Product Ads Keep Growing

Spending on image-based product ads rose 73 percent on Google and Bing combined. Over a quarter (27 percent) of Google ad clicks came from PLAs. Over half (52 percent) of non-brand clicks on Google were on PLAs. CPCs on product ads rose almost 20 percent, while text ad CPCs remained flat as brand text ad CPCs fell.

ROI on PLAs was 11 percent higher than on comparable non-brand text ads in Q3. Interestingly, although CTR and conversions rates were higher on PLAs, average order value (AOV) was 116 percent lower on PLA clicks than non-brand text ads. CPCs on PLAs were on average 6 percent lower than non-brand text ad CPCs in Q3. However, RKG predicts this gap will close as competition heats up on PLAs during the holiday season.

Bing’s product ads program continues to grow, with over 10 percent of non-brand spend on Bing Ads going to product ads. Revenue contribution was a healthy 13 percent of the total non-brand pie among typical retailers. CTR was 74 percent higher on Bing product ads versus comparable non-brand text ads.

Mobile Spend Share Rises

Mobile (which includes smartphones and tablets in this report) constituted 28.4 percent of paid ad spending in Q3, compared to 23.9 percent a year ago.

Ad spend on smartphones shot up 117 percent, though the revenue from that traffic still does not match desktop among RKG’s retail-centric client base.

Revenue-per-click from smartphone traffic is 66 percent lower than desktop. Smartphone CPCs ticked up slightly in the past two quarters, but remained 59 percent lower than desktop. “This is primarily a reflection of the  large differences in online conversion performance that most advertisers continue to see across smartphones, desktop and tablets,” writes RKG’s Mark Ballard, the report’s author.

Smartphone CPCs among RKG’s client set rose sharply this quarter compared to last year for a couple of reasons: 1. Smartphone bids were held back in 2013 to improve ROI, keeping year-over-year spending growth “somewhat artificially low for several quarters”. 2. Bing’s mobile traffic surged in Q3 of this year.

Spend, clicks and CPCs by device Q3 2014 RKG

Considering Cross-Device Conversion Estimates

Factoring in Google’s cross-device conversion estimates gave smartphones a 17 percent bump in conversion contribution. However, overall share of smartphone conversions only rose by 0.7 percent when looking at cross-device estimates.

cross device conversion estimates share q3 2014 RKG

The full report, which offers data across channels, can be downloaded here.

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