US Search Spend Jumps in Q1; More Growth Forecast

April 10, 2012

adobe-us-search-spend-and-roi-q12011-q12012-april2012.jpgUS search spend increased 16% year-over-year in Q1 2012, while ROI grew 11% year-over-year, indicating room for increased spend, per an [download page] April 2012 report from Adobe. In fact, the report predicts that search spend in the US will increase 10-15% for the rest of 2012. Mobile had a strong showing in Q1, with overall spend on devices reaching 7.65% of all search spend in the US, forecast to grow to 15-20% of total spend by the end of this year.

Adobe’s figures compare to April 2012 data from IgnitionOne, which reported paid search spending growing 30.3% year-over-year in Q1. That study also reported that mobile search held 12.3% share of total search advertising spend in Q1, relatively unchanged from the previous quarter.

Google and Bing/Yahoo ROI on Par

Google cost per click (CPC) dropped 5% year-over-year in Q1 2012, while Bing/Yahoo continued to rise, growing 18% from Q1 2011. Google increased click volume by 21% compared to a year earlier, while Bing/Yahoo volume remained relatively flat. Search spend share remained relatively steady at 79% for Google and 21% for Bing/Yahoo.

While impressions on Bing/Yahoo declined by 7%, they increased by 5% on Google. Google click-through rates (CTR) jumped 21%, while they dropped by 1% on Bing/Yahoo. Meanwhile, the average revenue per click (RPC) for Bing/Yahoo remains significantly higher than for Google, although the 18% year-over-year increase in Bing/Yahoo CPC rates means that the ROI on Bing/Yahoo is now basically equal to the ROI for Google.

Tablet Spend Outpaces Smartphones

Data from Adobe’s “Global Digital Advertising Q1 2012 Update” indicates that tablets are fueling much of mobile’s growth in the search space, with tablet spend growing from virtually nothing in May 2011 to 4.25% of all search ad spend by March 2012. This means that spending on tablets now exceeds smartphones, with the inflection point occurring in October 2011.

The IgnitionOne report (see link above) also finds greater paid search spending on tablets, with the devices making up a greater proportion of overall paid search spend. According to that report, tablets accounted for 67.4% of total mobile budgets in Q1 2012, meaning that they held 8.3% of total search advertising budgets for the quarter.

Meanwhile, data from the Adobe report indicates that tablets are displaying 4% higher conversion rates than desktop, while mobile conversion rates are much lower, at just 29% of desktop rates. CPC rates on tablets are at 70% of desktop rates, while on mobiles they are at 55% of desktop rates.

Facebook Spend, Engagement Up

Facebook post engagement increased 176% year-over-year, possibly due to the new platform changes the social network has made in the past 2 quarters. Facebook spend has also grown significantly, by 93% year-over-year, representing 3-5% of search spend. And while Facebook ad CPC rates have increased 40% quarter-over-quarter for the past 3 quarters, CPC rates on Sponsored Stories tend to be lower than Marketplace Ads, which Adobe interprets to mean that temporary decreases in CPC rates may be upcoming.

Other Findings:

  • In the US, within the automotive sector, search spend and CPC dropped quarter-over-quarter, though ROI rose. Year-over-year impressions declined 8%, but spend and ROI were up 23% and 18%, respectively.
  • Retail sector spend in the US was down 5% year-over-year resulting from a 17% decrease in CPC rates.
  • The finance sector posted strong growth with a 17% year-over-year spend increase, and a 36% jump in ROI.
  • UK search spend rose 3% year-over-year in Q1, while ROI grew by 5%. Mobile spend in the UK is currently higher than in the US (11% vs. 8%).

About the Data: The Adobe analysis of digital marketing and Facebook performance is based on data derived from technology Adobe acquired from Efficient Frontier and Context Optional, which is now part of the Adobe Digital Marketing Suite (DMS). Adobe built a client index representing over 15 advertisers and 20 million fans from a multitude of verticals including retail, entertainment, CPG, and finance from a subset of advertisers, brands, and fans managed through the platforms. Adobe then analyzed advertiser and user behavior for three quarters, beginning in Q2 2011.

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