SEARCH ENGINE MARKETING ROUNDUP

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1 January 2016 SEARCH ENGINE MARKETING ROUNDUP Search advertising remains at the top of the list for ad spending worldwide. With mobile search gaining in importance, 2016 could see even greater spending on the channel. emarketer has curated a Roundup of articles, insights and key data around the latest trends in search engine marketing. presented by

2 SEARCH ENGINE MARKETING ROUNDUP Overview Display ad spending may be about to outpace search this year in the US, but in many markets, search is still in the lead and expected to stay there. And according to 2015 research, marketers around the world are planning to increase search spending this year. AdMedia Partners surveyed marketers in Q4 of last year about their plans for digital media spending in Though newer areas like programmatic buying and native advertising were more commonly expected to enjoy large budget increases in the coming year, marketers expected to put more new dollars toward search than display formats. Just 2% of respondents said they would up search spending by more than 30% but about one in 10 marketers did plan to increase search spend by 20% or more. And 16% said they would boost spending by at least 15% over 2015 levels. Two in five respondents planned to add between 10% and 15% to current search budgets for the year ahead. Mobile where search is gaining greater importance was expected to see bigger budget increases in 2016, which could include additional mobile search spending. Mobile accounts for a significant share of paid search clicks and ad spending around the world, according to data from Kenshoo about the digital marketing technology company s clients. Expected Growth in Select Digital Advertising Formats in 2016 According to Marketing Executives Worldwide % of respondents 0%- 10%- 15%- 20%- 25%- >30% 10% 15% 20% 25% 30% Display Search advertising Programmatic Custom content/ native advertising Video Social Mobile marketing 54% 44% 17% 16% 15% 15% 8% 30% 40% 26% 29% 32% 30% 27% 11% 8% 26% 24% 19% 27% 20% 2% 3% 14% 18% 18% 17% 17% 0% 3% 10% 8% 8% 6% 13% 3% 2% 7% 5% 8% 5% 15% Source: AdMedia Partners, "Mergers and Acquisitions Prospects for Marketing Services, Media and Related Technology Firms: 22nd Annual Market Survey 2016," Dec 21, Mobile Share of Paid Search Ad Spending and Clicks in the Americas, Asia-Pacific and EMEA, Q Q % of total among Kenshoo clients Americas Asia-Pacific EMEA Q Q Q Q Q Spending 35% 38% 39% 39% 43% Clicks 40% 45% 43% 44% 51% Spending 36% 38% 39% 40% 42% Clicks 46% 49% 50% 53% 55% Spending 32% 34% 34% 35% 38% Clicks 34% 37% 37% 41% 46% Note: represents activity among Kenshoo clients, broader industry metrics may vary Source: Kenshoo, "Global Search Trends Q3 2015," Oct 14, In Q3 2015, more than half of all clicks on paid search ads in the Americas and Asia-Pacific came from mobile devices. Spending was slightly lower, at 43% and 42% mobile, respectively. EMEA was a bit behind when it came to mobile search, with a 46% of clicks coming from mobile along with 38% of spending. Search Engine Marketing Roundup Copyright 2016 emarketer, Inc. All rights reserved. 2

3 Marketers Are Bullish on Pay-per-Click Channels Paid search works Pay-per-click (PPC) advertising, including text ads, remarketing and mobile ads have performed better than expected for many marketers this year, leading to 2015 investments that were larger than initially planned. And research suggests those results will lead to even greater spending levels next year. According to Hanapin Marketing, most US marketing professionals are happy with the way PPC advertising has worked out for them so far this year. In August, nearly eight in 10 said 2015 PPC success was really good, with another 20% rating it fair. A solid majority also rated this year s PPC market better than 2014 s. Text ads were the most important PPC format for respondents, followed by remarketing ads and mobile ads. Like , PPC ads especially paid search in the form of text ads can seem unsexy, but still deliver results for marketers and rank consistently high among spending priorities. Nearly 75% of respondents to the Hanapin Marketing survey planned to increase spending on AdWords in the next 12 months, and 60% planned to spend more on Bing ads. The Relevancy Group found in April that 72% of US marketing executives considered paid search one of their two most effective channels for delivering revenue results in a survey that included traditional media as well as digital. More than half of businessto-consumer (B2C) marketers surveyed in November 2014 by Webmarketing123 said they could prove clear ROI from paid search more than for any other digital channel mentioned. Primary Attitude Toward Pay-per-Click (PPC) Success and the PPC Market in 2014 vs According to US Marketing Professionals % of respondents Fair 20% Poor 2% Really good 78% PPC success in 2015 Same 30% Worse 10% Better 60% PPC market, 2014 vs Source: Hanapin Marketing, "The State of PPC," Oct 7, Most Important Pay-per-Click (PPC) Channels for Advertisers According to US Marketing Professionals, Aug 2015 % of respondents Text ads 90% Remarketing ads 80% Mobile ads 71% Display network ads 54% Shopping 48% Social network ads 40% Programmatic 33% Native 25% Source: Hanapin Marketing, "The State of PPC," Oct 7, Search Engine Marketing Roundup Copyright 2016 emarketer, Inc. All rights reserved. 3

4 Local-Business Searchers Welcome Mobile to the Neighborhood Mobile-optimized sites a must for local businesses Local search has gone mobile, and recent research indicates that it s critical for local businesses to have their mobile presence up to par. According to BrightLocal polling conducted in April 2015, nearly four in 10 US adult mobile device users had searched for local businesses via mobile at least monthly in the past year, compared with three in 10 two years prior. An additional 32% had searched a few times. Further responses highlighted demand for mobileoptimized sites. Browsers were the preferred platform used to search for local businesses via mobile, favored by 50% of respondents up from 44% in Meanwhile, maps had fallen in popularity, from 45% to 40%, and apps remained the least popular, with just 10% share. Fully 38% of mobile users said they were impressed when they found a local business with a website designed for mobile, vs. 25% who said the same in 2013, and one-third said all local businesses should have websites designed for mobile (up from 25% two years prior). Further, just 17% did not expect a local business to have a mobile-designed website down from 53% in Respondents also appeared more willing to take the next step if they liked what they saw when searching, as over six in 10 were more likely to contact a local business if it had a mobileoptimized site, up from 38% in What do consumers want once they get to a local-business mobile site? Store details such as address, directions, hours and phone numbers were the most popular. Product lists and pricing were each cited by just under three in 10. Respondents showed smaller interest in digging through text, with customer testimonials and about us pages less popular, for example. emarketer estimates that there will be million mobile phone search users in the US this year, representing just under half of the population. Next year, million mobile phone users of any age will search on such devices at least monthly via browser or app, representing nearly 55% of all consumers in the country. High mobile search usage, along with the pressure Google s latest algorithm puts on companies to optimize for mobile, means local businesses would be wise to focus on creating a stellar mobile site. Frequency with Which US Mobile Device Users Search for Local Businesses via Mobile Device, 2013 & 2015 % of respondents Every day 7% 5% Every week Once per month 10% A few times Just once Never 7% 7% 13% 14% 19% % 23% 32% 39% Note: ages 18+; in the past 12 months Source: BrightLocal as cited in company blog, May 13, Most Important Types of Information When Looking at Local-Business Websites via Mobile Device According to US Mobile Device Users, April 2015 % of respondents Physical address 52% Map & driving directions 47% Opening hours 44% Phone number 37% Price list 29% List of products 27% 16% Photos 15% Store finder tool 15% Contact 14% 10% Customer testimonials "About us" page Note: ages 18+ Source: BrightLocal as cited in company blog, May 13, Search Engine Marketing Roundup Copyright 2016 emarketer, Inc. All rights reserved. 4

5 For Effective SEO, Content Is King Relevant content creation is the most effective SEO tactic but the second most difficult Marketers rely on search engine optimization (SEO) to improve search rankings, website traffic and lead generation, and in June 2015 research by Ascend2, 89% worldwide rated SEO successful at achieving these objectives. Further, in February 2015 polling by Econsultancy, fully 73% of inhouse marketers and 76% of US agencies worldwide said SEO provided excellent or good return on investment (ROI), the first- and secondhighest responses. More than seven in 10 respondents said SEO effectiveness was improving, and content was by far the most important factor in this. Fully 72% cited relevant content creation as the most effective SEO tactic. Unfortunately, though, it was also the second most difficult, at 46% of respondents. an average CTR of 27.4%, dropping to respective rates of 17.6% and 13.9% for Nos. 2 and 3. Most Effective vs. Difficult SEO Tactics to Execute According to Marketing Professionals Worldwide, June 2015 % of respondents Most effective Most difficult Relevant content creation 72% 46% Keyword/phrase research 48% 20% Frequent website updating 34% 28% Relevant link building 33% 52% Social media integration 28% 22% Frequent blogging 23% 28% Mobile search optimization 17% 25% Website URL restructuring 16% 20% Note: n=286 Source: Ascend2, "Search Engine Optimization Survey Summary Report," June 9, The second most effective area, keyword and phrase research, proved to be much easier at executing; however, this stresses content s importance again, as these terms must relate to the content produced. Putting manpower toward frequent website updates as well as link building also ranked highly for effectiveness, though the latter was the most difficult to execute. While website URL restructuring was the least difficult, it was also the least effective. Outside experts can help marketers maximize SEO efforts and effectiveness. As such 81% of Ascend2 respondents outsourced some or all of their SEO tactics. Q data from AdLift reaffirms the importance of showing up at the top of search results. Looking at the clickthrough rate (CTR) of US desktop organic search results on Google, average CTR for branded keywords in position one was 45.7%, vs. 11.6% for second and 5.4% for third. Similarly, CTR for nonbranded terms was 24.7% for spot one, vs. 12.8% and 7.4% for Nos. 2 and 3. Mobile showed similar results. CTR for branded keywords in position one was 46.4%, vs. 10.8% in second and 6.1% in third. For nonbranded terms on mobile, first position saw Search Engine Marketing Roundup Copyright 2016 emarketer, Inc. All rights reserved. 5

6 Get Outta Town, PCs! Mobile Takes Over Local Search Volume Local mobile search queries will total 81.8 billion this year Last year, mobile passed desktop for local search query volume, according to BIA/Kelsey data released in May Rapid growth is set to continue for the former. The research reported that there would be 81.8 billion US local search queries conducted via mobile in 2015, up 23.0% over In comparison, desktop local search volume was expected to drop slightly this year, from 65.6 billion to 64.6 billion. Such trends were expected to continue over the coming years, and BIA/Kelsey estimated that by 2019, the number of US local searches through mobile devices would reach billion, vs billion for desktops. As more consumers run local searches on mobile, advertisers are increasing spending on local mobile ad campaigns. In April 2015, BIA/Kelsey estimated that US mobile ad spending on local, or location-targeted, placements would rise 56% this year to $6.7 billion, or 37% of all mobile ad dollars. Even in 2019, growth was expected to be 18%, pushing US mobile local ad spending to $18.2 billion. emarketer expects mobile to overtake desktop for US search ad dollars this year, rising from $8.72 billion to $12.85 billion just slightly above desktop s $12.82 billion. At the same time, there will be million mobile phone search users in the US, representing 49.0% of the population. US Local Search Query Volume, Mobile vs. Desktop, billions Mobile Desktop Source: BIA/Kelsey as cited in company blog, May 14, US Search Ad Spending, by Device, billions $8.72 $ Desktop* Mobile** $12.85 $ $17.87 $ $21.73 $ Note: includes contextual text links, paid inclusion, paid listings and SEO; *includes spending primarily on desktop-based ads; **ad spending on tablets is included Source: emarketer, March Search Engine Marketing Roundup Copyright 2016 emarketer, Inc. All rights reserved. 6

7 The Future of Cross-Device Search: Better Targeting Search marketers move on from the keyword to secondary search signals US internet users are conducting more and more searches that start and finish on different devices. As advertisers shift more of their search budgets to mobile, this multidevice behavior makes paid search targeting and accurate performance measurement more difficult. But there are some methods and best practices that marketers can adopt to improve their results, according to a new emarketer report, Cross- Device Search Marketing: As Search Goes Multidevice, Ad Targeting and Measurement Struggle to Keep Pace. Analyzing cross-device search user behavior is difficult, and marketers disagree about what will help effectively reach such users moving forward. For many, improved methods for targeting multidevice search users will be key. This will involve using secondary search signals such as the type of device along with user location and time of day to further inform bidding strategies. Paid search marketing has long been a discipline focused on maximizing the value of keywords. But the evolution of search toward cross-device leads many to conclude that keywords may no longer be enough. If you are a marketer, you re building a marketing plan against an audience. You have a specific person you re trying to reach, not a keyword, said John Cosley, director of product marketing for the search advertising business group at Microsoft. Focusing just on keywords is like reading an from someone where you don t get as many contextual clues. You just have the text, said Jeremy Hull, director of bought media at iprospect. Looking at other information that the user passes when they search, such as device specifically, but also location... that s equivalent of being able to have a face-to-face conversation with someone where you can read their body language. To help solve this problem, marketers are increasingly using secondary data from CRM programs along with search cues like time of day, user location and device used to further targeting strategies for search. How this might work in practice is still up for debate, though a number of sources suggest marketers typically use this information to help decide on bid adjustments. For instance, a search user in a specific ZIP code might be worth more to an apparel company even if he or she doesn t search for jackets. It s more context-based. For example, say [the user] lives in an area that gets a lot of rain, said Brian Lee, market research analyst at Marin Software. While they might not be looking at rain products at that moment, it s related to their location and the audience more than it s related to their current search topic. Other marketer surveys confirm that many are increasingly looking to customer data to improve targeting efforts. A February 2015 survey by Duke University s Fuqua School of Business investigating US marketers usage of customer behavior data for targeting purposes implies that the practice is increasing. Although slightly less than half of US marketers in the survey currently used data for targeting, more than 90% said that their use of such data was increasing. US Search Users and Mobile Phone Search Users, 2014 & 2019 millions Search users Mobile phone search users Note: search users are not mutually exclusive; there is overlap between groups Source: emarketer, Feb 2015; confirmed and republished, July Search Engine Marketing Roundup Copyright 2016 emarketer, Inc. All rights reserved. 7

8 Relevant Context Breeds Mobile Search Ad Conversion John Cosley Director of Product Marketing, Search Advertising Business Group Microsoft Smartphones are outpacing desktops and tablets as a growth driver of search, but mobile search advertising conversion rates are lagging behind. John Cosley, director of product marketing for the search advertising business group at Microsoft, spoke with emarketer s Jeremy Kressmann about why context ultimately determines whether searches result in conversions. emarketer: Which devices are contributing to the most growth in new search right now: desktops, smartphones or tablets? John Cosley: We are seeing the most explosive growth in mobile, while desktop growth is much flatter. Tablet growth falls somewhat in between, but it s closer to being a straight line of modest growth vs. the hockey stick curve we re seeing for mobile. Right now, we have roughly onethird of our queries coming from mobile devices, with the other two-thirds coming from desktops and tablets. emarketer: What percentage of consumers conduct searches across multiple devices, and what effect does this have on conversion? Cosley: Between 60% and 80% are multidevice users, but only a small percentage of their searches lead to conversions. Overall, only 12% of users converting on a desktop start their search on a mobile device, and 16% of users that convert on a mobile device started searching on a desktop, but this varies by vertical. For people that are looking for restaurants, for example, the conversion rate goes up to 20%, regardless of the device. It s all about context. If you re looking for a restaurant, it s usually because you re going to get something to eat within the next 24 hours, whereas if you are looking to buy a car or to plan a trip, the context is completely different. emarketer: How do searches vary across devices? Are there any key differences? Cosley: Our data shows that about 45% of users have searched for similar topics on both the desktop and mobile devices within a short timeframe. This indicates that there s overlap of intent, so the differentiator becomes the accessibility of the device. If a person is working at a computer, then their intent would lead them to use that device for the search right away. When they re commuting or sitting on the couch, then their phone or tablet which is always near becomes the more convenient device. The engines under the hood are getting smarter about understanding context around mobile queries and matching advertisers to user context. emarketer: How does the time of day determine which device will be used for search? Cosley: Generally, we see more desktop traffic happen earlier in the day. There s a spike (for mobile devices) in the early morning as people are heading into work, but then the desktop becomes dominant while people are sitting at their desk. And as they head home, the desktop drops off in the evening while the mobile and tablet assuming the tablet has a wireless connection re-emerge and stay strong well into the evening hours. There are verticalspecific patterns as well. In the entertainment vertical, MP3 downloads spike during the morning on smartphones. The desktop then becomes dominant until about 11:00am. Between 11:00am and 2:00pm, during lunch time, phones take over. Device use fluctuates based on convenience in a given context. emarketer: How are advertising platforms evolving to better reach consumers that transition between devices? Cosley: The platforms are maturing quickly. Even in the last 12 months, advertising platforms have made significant strides towards making it easier for advertisers to target mobile devices. Google now offers enhanced campaigns, and Bing Ads is following suit with their unified device Search Engine Marketing Roundup Copyright 2016 emarketer, Inc. All rights reserved. 8

9 targeting. The engines under the hood are getting smarter about understanding context around mobile queries and matching advertisers to user context. The platforms have added more ad products that help advertisers deliver better mobile experiences to consumers, and are now enabling more audience-based buying scenarios. Thanks to the universal event tracking (UET) feature, Bing Ads is offering targeting solutions that enable advertisers to pinpoint specific audience-based buying scenarios and target consumers based on a behavior, such as visiting a brand s mobile site. emarketer: What can advertisers do to improve mobile search marketing campaign effectiveness? Cosley: Advertisers need to optimize customer experiences for mobile devices. Otherwise, if they send someone to a site that s not optimized for a mobile device and is difficult to navigate or has broken graphics, their expectations for conversion should be relative to the quality of their ad. In the ad industry, we have to hold ourselves accountable for not only building ad products, getting queries, gathering marketplace intelligence and developing tools, but also informing advertisers that if they want mobile to deliver the same value as the desktop does, they need to make investments in providing customer experiences that are contextually relevant for a mobile device. Less than 10% of advertisers have mobile-optimized experiences, but that s a very important component of return on investment. emarketer: Can audience-based targeting, rather than keyword-based targeting, also improve search marketing? Cosley: Absolutely. We are investing in this technology across both search and display, and Google is doing the same. As a marketer, you re building a plan against an audience. You have a specific person you re trying to reach, not a keyword. The more we can do to take different data signals that we collect across a variety of touchpoints and use our own intelligence and machine learning to help marketers connect with audiences, the more value we can bring to them and the more reward we get for doing that. Remarketing is a first step in that direction as well.... Advertisers that are retargeting customers who have put something in their cart but never returned to purchase are seeing triple-digit return on investment and conversion rates. Marketers Looking to Improve Mobile Search Advertising ROI Jeremy Hull Director, Bought Media iprospect Although marketers continue to boost spending on mobile search advertising, return on investment from mobile campaigns remains disproportionately low. Jeremy Hull, director of bought media at iprospect, spoke with emarketer s Jeremy Kressmann about the challenges associated with optimizing mobile campaigns and measuring performance. emarketer: How does mobile search advertising ROI compare with that of desktop search? Jeremy Hull: The number of people converting on smartphones is high and continues to rise. But even with the lower cost per click (CPC), mobile advertising ROI has not caught up to desktop advertising ROI. This is partly because people aren t just looking to make a purchase on mobile. Rather, they re looking for information or are trying to place a call. Those actions are just as valuable, but if you re operating purely on a last-click ROI sampling, you re not factoring that value in. Think back to attribution. Before we had good attribution technology, there was the philosophy that people searched, saw an ad and took an action. Now that we better understand attribution, we see that everyone takes a different path from the point of engagement to the point of conversion. Search Engine Marketing Roundup Copyright 2016 emarketer, Inc. All rights reserved. 9

10 emarketer: What s contributing to the disconnect between increased spending and ROI in the mobile advertising space? Hull: Brands are not differentiating their mobile campaigns. When people search on their smartphones, they should see different ad copy, different site links, different messages and different extensions. Instead, many advertisers just turn their desktop campaign into a mobile campaign with the same messaging. Cross-device campaign performance measurement also presents a challenge, but Google and Bing are working to provide solutions that tackle it. Google, for example, now provides cross-device conversion estimates. While traditional cookie tracking monitors individual conversions, the cross-device conversion tool can pinpoint when customers use multiple channels before completing a purchase and estimate what the conversion rate would be if you could track 100% of users. Brands are not differentiating their mobile campaigns. When people search on their smartphones, they should see different ad copy, different site links, different messages and different extensions. emarketer: Will Google s recently introduced AdWords Enhanced Campaigns boost ROI on mobile advertising spending, or did the feature just push some marketers into mobile before they were ready? Hull: It served as a wake-up call for brands that haven t yet embraced mobile, but it hasn t changed the ROI of mobile; it just made advertisers pay more attention to it. The problem that Google, Bing and Yahoo still need to solve is that there s less real estate on mobile screens for paid search ads. On a mobile search results page, your ad is either in the top two positions or it s not seen, and search engines are hoping that these top two positions become more coveted. Instead, advertisers look at the CPC of those top two positions, weigh that against the direct ROI they re getting from mobile and decide not to advertise at all. That s why everyone is trying to develop new tools to measure the performance of mobile outside of the last click. Hull: Google s call-only ads are interesting. They appear specifically on smartphones, and the only way consumers can engage with them is by tapping them to call the brand directly. This format doesn t work for every advertiser. But for certain brands, speaking to consumers on the phone is valuable because it moves them down the conversion funnel faster than browsing a website. emarketer: Do any of iprospect s clients use retargeting as part of their mobile search marketing tactics? Hull: We use traditional retargeting for display ads, and we use Google s remarketing list for search ads. The industry as a whole has only scratched the surface of retargeting functionality, and it s not necessarily a cross-device solution yet. For cross-device success, what it comes down to is building an ecosystem that connects data points in a way that s nonpersonally identifiable and doesn t compromise consumers security or privacy, but allows you as an advertiser to have an ongoing conversation with them. That s what Facebook has built successfully, and that s what Google, Bing and Yahoo are looking to build. For the time being, there s a lack of continuity that still represents a big opportunity. emarketer: Do you consider audience-based targeting to be a more effective advertising approach than keywordbased targeting? Hull: Search is predicated on the user telling you what they re interested in. It s a user-initiated opportunity for conversation, so keywords are always going to play a role. However, the more secondary signals and context brands have access to, the more effectively they are going to communicate with customers, address their needs and provide them with information that s contextually relevant. emarketer: What are some of the advertising tactics that have worked well in the mobile search environment? Search Engine Marketing Roundup Copyright 2016 emarketer, Inc. All rights reserved. 10

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