IAB and DDMA Report on Search Advertising

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1 The Netherlands 2015 June 2016

2 Introduction Last year we performed the first National Search Study. Due to that moment the Dutch search market has always been virtually uncharted territory when it comes to quantitative studies. As Search Marketing specialists we ve always been depending on data and insights from large Search Publishers and International Studies. This Study has been initiated to change that situation, by collecting local CPC, position and CTR data and discover trends within the Dutch Search market. The success of the first edition enabled us to perform the second edition, this year in collaboration with DDMA Search Council we were able to perform an extended Study. As a branch organization we have been pleasantly surprised by the amount of enthusiasm and cooperation we have received. A large number of agencies have embraced this research and recognized its importance by participating and sharing their data. This holds great promise for the future of this study Arjen Hettinga IAB Taskforce Search Jeroen Verkroost IAB Netherlands Search advertising has become crucial. Advertisers and marketers can no longer afford to leave it to the experts. In today's market, digital advertising is about 40% of total advertising spend. Search advertising takes about half of that digital spend. That means that if you are advertising, this report is about a single channel that takes 20% of your marketing budget Time to pay attention Diana Janssen DDMA Search marketing has developed immensely the last couple of years and has become an important part of a customer centric marketing approach. Tooling is being connected and more and more data is being collected while search engines are demanding relevance. Therefore it is one of the channels that can really contribute to communicating with customers in a way that they can actually appreciate. Nathalie La Verge Deloitte The continuous increase of digital marketing spend in general combined with the search functionality embedded in the whole customer journey, promises an interesting future for Search within the entire digital marketing ecosystem.

3 Methodology Report on Search Advertising Collection Aggregation Conversation Validation Publication Deloitte collects data covering the majority of the market Participants data is processed based on desk research and expert opinions Initial findings are verified with industry experts and media buyers Findings are crossreferenced and validated with selected respondents Final findings are presented to IAB Netherlands/DDMA and industry participants Survey methodology Our current report is based on 13 participating agencies which represent large share of Dutch advertisers The figures are drawn up on the basis of company input and have not been verified by Deloitte Only aggregated results are published, individual company information is held in strict confidence with Deloitte Research Initial findings from processed data are interpreted by Deloitte and research group members of IAB Taskforce search and DDMA: Arjen Hettinga (Oogst) Martijn de Kruijk (StormMC) Jeffrey Bleijendaal (ematters) Maarten de Graad (Nochii) 3

4 Executive summary Paid Search Advertising CPC The Cost per Click (CPC) for 1st position for Finance and Retail related keywords increased with +3% and +2% respectively, whilst the CPC for Travel related keywords declined with - 17%. Advertisers are bidding an average CPC of 9,2 for Finance related keywords to be able to reach best page position. Scope The scope of this research includes high volume generic keywords during December 2013, 2014 and 2015 within Google Search. The keywords are determined by IAB Taskforce Search and its high volume scope verified by Google Netherlands. Mobile The share of paid search spend on phone searches increased significantly. In 2015 about half of the search spend (49%) for Travel and Retail keywords is allocated on mobile devices (phone + tablet). The spend of Finance keywords on mobile is less (38% of budget) however the share of phone more than doubled from 9% to 19% share of revenue in Google Shopping Retail more than tripled the budget spend on Google Shopping. The share of advertising spend on Google Shopping increased from 6% in 2014 to 23% in Branding Search For all Industries in scope spend on Branding Keywords (keywords with a brand name included) increased. The share in Retail almost doubled from 6% in 2014 to 11% in CTR Advertisers achieve higher Click Through Rate (CTR) for paid search results in 2015 for Finance keywords with top position CTR increasing from 18,2% to 22,1% in Whilst the CTR curve for Travel keywords remains stable, the CTR for top position Retail keywords declined from a CTR of 13,3% in 2014 to 9,7% in

5 Search Advertising 5

6 Online advertising market The paid search advertising market realized strong growth throughout the last years Net/Net Online Advertising market (m ) ,0% ,5% ,9% ,8% +6,6% +6,8% F Paid Search Display and Classifieds In recent years paid search advertising shows an incredible double digit growth and accounts for a large share (45%) of the total online advertising market. In this study, data is segmented based on the device (desktop, phone, tablet) and on the type of advertising: Branding advertising includes advertising while searching for branded keywords such as OHRA, Nike, KLM. Non branding advertising includes advertisements while searching for generic keywords such as verzekering, schoenen, vliegtickets. Shopping advertising appears on the right side of the search results in Google. This type of advertising works with both branded and non branded keywords in the retail industry. Source: IAB report on Online Advertising Spend The Netherlands

7 Spend on Paid search Paid search advertising per device per industry Share of paid search spend per device Finance Desktop Tablet Phone 9% Within the Retail and Travel industry half of the search spend is on mobile devices (both 49%). The finance industry has the lowest spend on 18% 73% 19% 19% 62% mobile search advertising (38% on phone/tablet) but is quickly gaining share with phone doubling in market share (from 9% in 2014 to 19% in 2015). The share of tablet advertising is stable within Finance and Travel and declines slightly within the Retail industry. Retail Travel Desktop Tablet Phone Desktop Tablet Phone 30% 18% 29% 14% 52% 57% 27% 51% 22% 29% 51% 20% Source: Survey respondents, Deloitte analysis The large increase in market share for Mobile is as expected, since mobile traffic is constantly rising in all industries and across all channels. The mobile device is more and more used for orientation in the customer journey, while Desktop and Tablet devices will most likely be the devices the purchase or booking is made on. This fact calls for a different approach of the medium Search, since it has a large impact on old fashioned strategies usually focusing on Desktop. Running mobile only campaigns are no longer an option but almost a necessity. Furthermore we expect a decline of tablet traffic over 2016, with a larger traffic spread between Mobile and Desktop since the technical differences between tablet and mobile devices are disappearing. Maarten de Graad Nochii Online Marketing 7

8 Generic high volume keywords This research includes keywords for the industries: Finance, Retail and Travel Scope of industry segments and keywords examples Generic high volume Longtail Branded Finance Car insurance Health Insurance Loans Mortgage goedkope autoverzekering goedkope zorgverzekering geld lenen hypotheek verzekering voor oldtimers zorgverzekering met lenzen geld lenen met schulden hypotheek tweede huis AEGON autoverzekering CZ zorgverzekering lening ABN hypotheek Rabobank Retail Books & Media Electronics Fashion Home & Garden Kookboek Laptop Sneakers Tuinstoelen Suikervrij kookboek Laptop met 17inch scherm Sneakers voor smalle voeten Tuinstoelen van riet De laatste mijl HP laptop Nike sneakers Tuinstoelen Leenbakker Travel Ticketing Hotels Travel package Vliegtickets Hotelovernachting Citytrip Wereldticket Diervriendelijk hotel boeken NYC citytrip KLM Vliegticket NH hotels TUI citytrips 8

9 Spend on Paid search How a search advertiser spends its money What is the share of the advertisers budget on longtail versus generic high volume keywords? What is the share of the advertisers budget per paid search rank position? Generic high volume keywords 10% Longtail keywords 90% Only 10% of search advertising is spend on high volume keywords (top 8 keywords with highest volume of every category). The majority of the budget is spend on unique / specific keywords. Between 2014 and 2015 we have measured a trend of relative more spend on longtail keywords with advertisers moving away from the highly competitive keywords. No 3 13% No 2 25% Other 14% No 1 48% Almost half of the advertisers budget is spend in the 1 st position (for generic high volume keywords). The difference between the lower positions is high due to the steep CTR curve. We have estimated the spend per position by combining the CTR/ CPC and the number of impressions per position curve. Source: Survey respondents, Deloitte analysis 9

10 Paid search prices CPC development for generic high volume keywords per industry Average CPC for 1st position Dec 2013 Growth 13/14 Dec 2014 Growth 14/15 Dec 2015 The CPC for first position has declined for Travel in 2015, returning to the same price level as of Within Travel the prices of hotel keywords declined while the prices for ticketing keywords kept stable. A possible effect of decline in prices is reduced competition due to the shift towards longtail keywords. Finance 7,3 +22% 8,9 +3% 9,2 Retail 0,88 +7% 0,94 +2% 0,96 Travel 1,4 +17% 1,7-17% 1,4 Source: Survey respondents, Deloitte analysis Finance and Retail showed only a marginal increase in CPC price. Within Finance, keywords for insurance increased while keywords for loans decreased. For Retail, the home & garden category showed an increase in price whilst keywords for electronics showed a decrease in price. Things changed. As advertisers, clients and users of Google, we re all spectators of the development and optimization of Search Engine Result Page (SERP). In 2015 the improvements regarding to SERP affecting the CPC are not worth mentioning. Nonetheless, just when things were starting to feel comfortable Google announced a major change. By removing the right hand side ads, Google increased the visibility of Product Listing Ads (PLA s). With few top positions and high volume non-branded keywords advertisers are heavily competing for prime positions. The consequence being that alternative and, most likely, more profitable verticals become more attractive. Martijn de Kruijk Storm Digital 10

11 CPC value per position CPC per position for generic high volume keywords per industry 100% CPC price relative to 1st position Similar to last year results the CPC prices for keywords in the Retail and Travel industry decline much faster per position than those in Finance. 75% 50% 25% Travel Retail Finance The graph clearly shows for Travel the highest positions are the most important. Advertisers are battling for the top of the Search Engine Result Page (SERP) what drives up the CPC for those positions. For Retail and especially Finance the graph is less steeper and more gradual. Since this is 2015 data and end of February 2016 Google changed the SERP concerning the way the ads are shown (4 top positions and no more text ads on the right side of the screen) these graphs shall be different. Also interesting will be the Retail graph since Shopping-ads are still shown on the right side of the SERP. Jeffrey Bleijendaal Ematters 0% Position Source: Survey respondents, Deloitte analysis 11

12 Finance 12

13 Spend on Paid search - Finance Spend development for each advertising type and device in Finance Branding Non branding Branding Desktop Tablet Phone Non Branding Desktop Tablet Phone % 18% 9% 22% 69% 9% 17% 74% Branding advertising includes keywords with a brand such as OHRA, Nike, KLM. Non branding advertising includes only generic keywords such as verzekering, schoenen, vliegtickets. Advertising on branding is relative large within the Finance industry with a large share (24% in 2015) of the budget spend. Within non branding keywords the spend on Phone devices is growing strong with a share increase from 9% to 21% in % 13% 22% 65% 19% 21% 60% 76% Source: Survey respondents, Deloitte analysis 13

14 Paid search CTR and CPC value per position - Finance CTR and CPC for generic high volume keywords in Finance Paid search CTR per position - Finance CPC relative to 1st position - Finance 25% 20% - Paid CTR Paid CTR Paid CTR % 75% CPC % The CTR for the top position keywords in Finance increased during % CPC % 25% 5% CPC declines faster from 1 st position in relation to the previous year. 0% % Position Position Source: Survey respondents, Deloitte analysis 14

15 Retail 15

16 Spend on Paid search - Retail Spend development for each advertising type and device in Retail Branding Non branding Shopping % 6% Branding Desktop Tablet Phone 23% 56% 21% Non Branding Desktop Tablet Phone 32% 49% 19% Shopping Desktop Tablet Phone 10% 10% 80% Adjustments in Google shopping during 2015 had a huge impact within the Retail industry increasing from 6% to 23% market share. Branding keywords almost double in share mainly due to the growth of branding keywords on phone. 88% % 11% 25% 42% 28% 54% 28% 54% 33% 18% 18% 66% Source: Survey respondents, Deloitte analysis 16

17 Paid search CTR and CPC value per position - Retail CTR and CPC for generic high volume keywords in Retail Paid search CTR per position - Retail CPC relative to 1st position - Retail 15% - Paid CTR Paid CTR Paid CTR % 75% 10% 5% The CTR for Retail keywords declined in performance on all positions during % 25% CPC 2014 CPC 2015 The CPC per position shows a similar curve in 2015 compared to % Position 0% Position Source: Survey respondents, Deloitte analysis 17

18 Travel 18

19 Spend on Paid search - Travel Spend development for each advertising type and device in Travel Branding Non Branding Branding Non branding % 81% 15% 19% Desktop Tablet Phone 30% 56% 14% 26% 52% 22% Desktop Tablet Phone 29% 57% 14% 30% 51% 19% Similar to the other industries the share of advertising spend on branding keywords is growing within the Travel industry. The share of branding increased with 4 percentage points with 19% of the total budget spend on branding keywords. Between branding and non branding keywords there is little difference between the allocation of budget per device. Just like the rest of the market we invest more in mobile presence on phone and tablet, both in brand and non brand keywords. The main growth is on non branded keywords, reaching new audiences in an effective way. We invest in those devices where our clients want to communicate with us, and where our clients are searching for a holiday. Edwin Hoff TUI Source: Survey respondents, Deloitte analysis 19

20 Paid search CTR and CPC value per position - Travel CTR and CPC for generic high volume keywords in Travel Paid search CTR per position - Travel CPC relative to 1st position - Travel 20% 15% - Paid CTR Paid CTR Paid CTR % 75% In 2015, the CPC for lower positions is relatively much cheaper compared to the price paid for top position. 10% 5% The CTR for travel industry keywords shows similar performance over the past 3 years. 50% 25% CPC 2015 CPC % Position 0% Position Source: Survey respondents, Deloitte analysis 20

21 Background information & Contact details 21

22 Background information Source data to results SEA/SEO data points: Aggregating: Results (CTR): Webmaster Tools Google Position (Organic) CTR AdWords Google Position (Paid) CPC CTR Spend Through invitation by IAB, DDMA and BvA under its members to participate, 13 companies* contributed to this study, including: Oogst, Sentimo, S&S Online Marketing, Suite Seven, Searchresult, ClickValue, Storm Marketing Consultants, Semwerkt, Stramark, S&D Interactive Media, Ematters BV, ING. Dataset: Multiple data points for 64 generic high volume keywords for Finance, Retail and Travel. Weighted nonlinear least squares fitting (function based on best fit): CTR (Position) = B Position 1 A e + CPC (Position) = n 1 i=0 C n A i e B i Position 1 Industry categories (i = 0,1,...,n) Weights = Spend / CPC Finance CTR A B C Paid Dec ,158-0,35 0 Paid Dec ,182-0,35 0 Paid Dec ,221-0,44 0 Retail CTR Paid Dec ,094-0,32 0 Paid Dec ,133-0,32 0 Paid Dec ,097-0,51 0 Travel CTR Paid Dec ,146-0,36 0 Paid Dec ,159-0,36 0 Paid Dec ,143-0,35 0 * Including participating companies that requested to be undisclosed in this research Note: CPC calculated parameters (e.g. A i,b i ) are not reported due to traceable individual participant data in one or more categories 22

23 Contact details For questions regarding this research feel free to contact: Nathalie La Verge Deloitte Technology, Media & Telecommunications Tel: +31 (0) Nathalie La Verge is a manager within the Deloitte Risk Advisory practice with more than 10 years of experience in risk consulting for companies in the Technology, Media & Telecommunications (TMT) industry. Nathalie leads all Deloitte projects commissioned by IAB. Jeroen Verkroost IAB Nederland Tel: +31 (0) jeroen@iab.nl Jeroen Verkroost is responsible for Dutch IAB research, including the IAB Netherlands/ Deloitte Ad Spend Study, all IAB commissioned research, and assists Dutch IAB members with their research projects. Also responsible for shaping the IAB knowledge base so that it meets members' needs moving forward. Diana Janssen DDMA Tel: +31 (0) dianajanssen@ddma.nl Diana is Director-general of the DDMA. DDMA s goal is to enable development and improve quality of Data Driven Marketing for its associated members and the digital industry. Jorrit Sloot Deloitte Data Analytics Tel: +31 (0) jsloot@deloitte.nl Philip Spaas Chairman IAB Taskforce Search Tel: +31 (0) philip@oogstonline.nl Jeffrey Bleijendaal DDMA Search Council Tel: +31 (0) j.bleijendaal@ematters.nl Jorrit Sloot is a senior consultant within the Deloitte Risk Advisory practice and specialized in risk analytics, data modeling, mathematical and quantitative data analyses for the Digital industry. Philip Spaas is chairman of the IAB Taskforce Search, which consists of the major search marketing agencies in The Netherlands. Our mission is to promote the knowledge, transparency and innovation in the Dutch market for search engine marketing, both SEO and SEA. We organize events, initiate market research and promote education. The DDMA Search Council unites the top Search experts in the Netherlands. Within the council they share knowledge and initiate research, education projects, publications and events to promote knowledge in the Dutch market for both SEO and SEA. 23

24 Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ( DTTL ), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as Deloitte Global ) does not provide services to clients. Please see for a more detailed description of DTTL and its member firms. Deloitte provides audit, consulting, financial advisory, risk management, tax and related services to public and private clients spanning multiple industries. Deloitte serves four out of five Fortune Global 500 companies through a globally connected network of member firms in more than 150 countries bringing world-class capabilities, insights, and high-quality service to address clients most complex business challenges. To learn more about how Deloitte s approximately 225,000 professionals make an impact that matters, please connect with us on Facebook, LinkedIn, or Twitter. This communication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively, the Deloitte Network ) is, by means of this communication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this communication.

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