Mobile Search Advertising Around the Globe: 2014 Annual Report

Transcription

1 WHITE PAPER Mobile Search Advertising Around the Globe:

2 TABLE OF CONTENTS Executive Summary 03 Introduction 03 Methodology 04 Part I United States 05 Part II United Kingdom and Eurozone 08 Part III Mobile Search Across the Globe 11 About Marin Software 14 Copyright 2014 Marin Software Inc. All rights reserved. 2

3 EXECUTIVE SUMMARY As mobile adoption makes the world more interconnected by the hour, advertisers will need to move faster and be more responsive to their customers. In working with some of the world s largest and most sophisticated advertisers, our research uncovered some very interesting trends that highlight the increased value of mobile devices as a mission critical channel for reaching consumers, and the increased competition that advertisers face. To create this brief, we sampled the Marin Global Online Advertising Index, composed of advertisers who invest more than $6 billion in annualized ad spend on the Marin platform to create this brief. Our research uncovered three key findings: 1. Consumer Adoption: At the current growth rate, mobile devices will account for 50% of all paid search clicks by December Increased Competition: Cost per click (CPC) on mobile devices increased at a much higher rate than cost per click on the desktop during. In some regions, tablet CPCs have surpassed desktop CPCs. 3. Improving Performance: Conversion rates on tablets and smartphones rose throughout as consumers became increasingly comfortable with mobile commerce. In the US, conversion rates on tablets edged out those on the desktop, marking an important milestone. INTRODUCTION Even though mobile devices have been around for years, it is nothing short of stunning how quickly smartphones and tablets have become an essential part of modern-day life. Today s consumers are constantly connected via one device or another. And while advertisers have historically had to play catch-up with mobile enabled consumers, we saw as the year where brands and agencies really began to focus on mobile advertising. According to emarketer, 19% of Google s ad revenue came from mobile search ads and it will increase to 30% over the next 3 years. 1 This growth reflects the shape of the digital advertising landscape as driven by the increased usage of mobile across consumer markets. Global smartphone penetration currently sits just above 60% with over 1 billion users. 2 emarketer predicts smartphone penetration to reach 69.4% by In addition, tablet sales are projected to exceed computer sales by The widespread penetration of smartphones and tablets only underscores the importance of mobile as an advertising channel

4 M Mobile Share of Google Ad Revenue 30.8% 25.3% 19.1% 12.3% 4.8% est est. Source: company reports, 2012 & ; emarketer, Aug As mobile devices become increasingly integrated with everyday life, advertisers need to adjust marketing strategies to accommodate the always-connected consumer, who is constantly on the go and whose shopping and product research behavior is vastly different than anything we ve seen before. This research brief analyzes mobile trends from, forecasts the state of mobile advertising for 2014, and examines the overall performance of mobile ads across devices. Our objective with this report is to help the digital marketer wrap their arms around the explosive growth in mobile advertising, while developing effective benchmarks and strategies for success. METHODOLOGY In this study, we looked across leading brands and advertisers that manage more than $6 billion in annualized online ad spend. Our data set represented all major industry sectors alongside the following countries or regions: Australia India Singapore Brazil Japan United Kingdom Canada Mexico USA China New Zealand Eurozone Russia The size and diversity of our data set, coupled with the broad geographic coverage, enables us to provide the most comprehensive report on how smart mobile devices are changing paid search. That being said, our clients mainly consist of large advertisers spending upwards of $100,000 per month on paid search, social and display. As such, the information presented in this report is biased towards larger advertisers, and may not reflect mobile search trends for small or medium sized businesses. Copyright 2014 Marin Software Inc. All rights reserved. 4

5 PART 1 UNITED STATES Mobile Search Trends and Projections Smartphone and tablet usage grew sharply in, with consumers embracing paid search on mobile devices and advertisers following suit. From January to December of, the share of paid search clicks from mobile devices increased from 21.8% to 34.2% of all paid search clicks. In particular, paid search clicks from smartphones almost doubled during that period. Projecting this trend forward, we think that the share of paid search clicks from mobile devices will break 42% by December 2014, with smartphones accounting for half of the overall volume. Additionally, our data suggests that mobile devices will account for 50% of all paid search clicks by December 2015, marking a significant milestone where mobile is the new normal. Mobile Click Share Mobile Smartphones Tablet 34.2% 32.1% 21.8% 21.9% 23.2% 23.5% 25.0% 26.7% 27.4% 29.2% 29.4% 29.6% 12.1% 12.0% 12.8% 12.9% 14.1% 15.5% 16.0% 17.4% 17.9% 18.4% 19.4% 20.3% 9.6% 9.9% 10.4% 10.7% 10.9% 11.3% 11.4% 11.8% 11.5% 11.2% 12.8% 13.9% Spend share, or percentage of budget, saw similar increases, with mobile spend share spiking a stunning 45% from January to December as it rose from 19.3% to 27.9%. Similar to 2012, we continue to see budget share lag click share on mobile devices. Also, the share of paid search budgets on smartphones surpassed the same for tablets in mid-. And our analysis indicates that mobile budget share will exceed one-third of overall paid search budgets by December Mobile Spend Share Mobile Smartphone Tablet 26.6% 27.9% 22.2% 22.9% 23.7% 24.4% 24.2% 19.3% 19.6% 20.1% 19.3% 20.7% 9.5% 9.7% 10.3% 9.4% 10.2% 11.3% 11.8% 12.5% 13.2% 13.3% 13.9% 14.4% 9.8% 9.9% 9.8% 9.9% 10.5% 11.0% 11.0% 11.3% 12.7% 13.6% 11.2% 10.9% Copyright 2014 Marin Software Inc. All rights reserved. 5

6 With smartphones accounting for a fifth of all paid search clicks, advertisers need to be increasingly thoughtful when it comes to allocating their paid search budget across devices. Specific things to consider include cost per click, click-through rate, and conversion rate across devices. Benchmarking Across Devices Advertising on a smartphone is intrinsically different from advertising on a desktop computer because of how consumers use smartphones and the difference in form factor. For example, many advertisers may have noticed that smartphone click-through rates are consistently higher than those on computer and tablets. There are a few different reasons for this. To start with, the limited screen size of smartphones reduces the number of ad impressions delivered per search. Additionally the increased urgency associated with being mobile and on-the-go can change consumer behavior and lead to greater engagement with the SERP. In, the average click-through rate on a smartphone was 3.75%, vs. 2.29% and 2.70% for computers and tablets, respectively. Average CTR by Device 3.75% 2.29% 2.70% However, when normalizing for position, it appears that click-through rates across devices might not be that different. Across devices, click-through rates are similar for ad positions one through five. Smartphone searches only deliver up to five ads, and not coincidentally, smartphone ad click-through rate disappears altogether after position five. 5.0% 5.2% Average C CTR by Ad Position 5.1% 2.4% 2.4% 2.9% 1.7% 2.1% 1.9% 1.3% 1.0% 1.3% Copyright 2014 Marin Software Inc. All rights reserved. 6

7 Mobile CPC shows advertisers another advantage of mobile advertising. The chart shows that smartphone clicks are about 30% cheaper than computer clicks, and tablets are about 8% cheaper. While CPCs are closing the gap, we still see smartphone CPCs being significantly cheaper than their computer counterparts for the near future, with tablets reaching computer levels. $0.83 Average CPC by Device $0.76 $0.58 When comparing CPCs in versus those in 2012, we see 20.8% and 22.6% CPC growth on smartphones and tablets. This rate of growth is almost double that of computer CPCs, which increased 10.7% in. The relative increase in mobile and tablet CPCs point to the increased competitiveness of mobile advertising, compared to the relative maturity of advertising on desktops. CPC Change, 2012 vs 20.8% 22.6% 10.7% However, conversion rates tell a different story. In, tablet conversion rates managed to edge out computer conversion rates for the first time (5.5% vs 5.3% respectively). This is an important milestone for tablets and underscores their role as emerging online shopping devices. Smartphone conversion rate still lags at 4.4%. However, when we compare conversion rates between 2012 and, smartphones and tablets have increased conversion rates by 57.1% and 66.7%, versus 35.9% for the desktop. Mobile conversions are growing faster than ever and advertisers are poised to take advantage of the mobile e-commerce revolution. Copyright 2014 Marin Software Inc. All rights reserved. 7

8 Average Conversion Rate by Device 5.3% 5.5% 4.4% PART II UNITED KINGDOM AND EUROZONE Mobile Search Trends In the UK, mobile click share grew from 24.4% in January to 43.4% by the end of the year, marking a 77.9% increase in. The Eurozone grew its mobile paid search click share from 12.4% to 20.2%, displaying an impressive 62.9% growth through the year. Mobile Share of Paid Clicks Smartphone Tablet 22.8% 12.3% 12.1% 20.6% 12.5% 7.3% 5.1% 7.7% January UK December January Euro December Ad spend share also showed marked growth across the board in Europe, reflecting the increased interest in mobile and realization of mobile relevance in. UK mobile ad budget share increased from 22.0% to 34.8%, or growth of 58.2% in. Meanwhile, the Eurozone mobile budget share increased from 10.0% to 20.9%, or an increase of 109%. In the Eurozone, mobile budget spend caught up with click share. Copyright 2014 Marin Software Inc. All rights reserved. 8

9 Mobile Share of Search Budgets Smartphone Tablet 21.9% 14.9% 13.1% 7.1% January UK 12.9% December 6.8% 3.2% January Euro 7.8% December Benchmarking Performance Across Devices Across the board, we saw that click-through rates for mobile devices are higher than that for computers. In the UK, click-through rates were significantly higher for mobile devices relative to the Eurozone. Average CTR across Devices 5.71% 2.59% 3.85% 3.02% 3.83% 3.63% UK Euro On the CPC side, we observed similar trends. In the UK and Eurozone smartphone cost per click was significantly less than that of computers and tablets. However, tablet CPCs in the Eurozone surpassed that of computers. This is a first for tablets and quite possibly a leading indicator on their emerging value to performance advertisers. Copyright 2014 Marin Software Inc. All rights reserved. 9

10 Average CPC across Devices UK Euro Smartphone CPCs saw the largest growth from 2012 to. Across both the UK and the Eurozone, smartphone CPCs increased just over 26%. Tablet growth slowed from 2012, increasing about 10% across Europe. Computer CPCs actually decreased in the Eurozone, dropping by about 3%. CPC Change, 2012 vs Computer Smartphone Tablet 26.7% 26.3% 13.3% 10.7% 10.0% UK -3.2% Euro Smartphone conversion rates remain below that of desktop and tablet. European smartphone conversion rates have grown sharply, similar to the US, signaling improved ad targeting and optimization, as well as consumer momentum on mobile advertising. Additionally, tablet conversion rates have been increasing in the Eurozone, and will likely reach the same level as desktops this year. Copyright 2014 Marin Software Inc. All rights reserved. 10

11 Average Conversion Rate 6.09% 4.60% 2.79% 1.76% 1.03% 1.67% UK Euro PART III MOBILE SEARCH ACROSS THE GLOBE Across the globe, we saw similar trends in mobile advertising. Mobile devices have seen widespread and rapid adoption around the world, with smartphones penetrating more and more markets. The charts below show click-share and budget-share across devices for each market under consideration. We also looked at device-specific click-through rates and cost per click for each market. Please note that this is only reflective of Google mobile data, and does not include data for other search engines, such as Bing, Yahoo! Japan, or Yandex. Click Share by Region Tablets Smartphones Computers 68.2% 93.9% 83.1% 86.9% 86.3% 65.0% 68.6% 84.1% 74.1% 75.7% 16.5% 30.8% 24.8% 11.2% 17.2% 9.7% 7.9% 15.3% 9.2% 11.2% 14.8% 3.6% 7.2% 2.4% 3.9% 2.6% 4.2% 6.6% 8.0% 7.1% Australia Brazil Canada China India Japan Mexico New Zealand Russia Singapore Copyright 2014 Marin Software Inc. All rights reserved. 11

12 p Spend Share y by g Region Tablets Smartphones Computers 72.57% 95.51% 86.10% 88.27% 92.34% 60.37% 68.21% 86.97% 77.36% 82.12% 12.97% 35.10% 24.26% 9.01% 7.01% 5.23% 12.23% 14.45% 7.14% 13.62% 2.32% 6.89% 4.93% 2.17% 4.60% 2.73% 4.53% 7.53% 7.80% 5.65% Australia Brazil Canada China India Japan Mexico New Zealand Russia Singapore Average CTR by Region 5.7% 5.0% 4.8% 5.0% 4.9% 4.3% 4.2% 3.6% 3.5% 3.3% 3.8% 2.9% 2.9% 2.5% 2.4% 2.4% 2.0% 1.7% 1.9% 1.8% 1.5% 2.0% 1.8% 1.8% 1.7% 1.7% 1.6% 1.3% 1.2% 1.1% Australia Brazil Canada China India Japan Mexico New Zealand Russia Singapore Copyright 2014 Marin Software Inc. All rights reserved. 12

13 Average CPC by Region $1.18 All amounts in USD $0.87 $1.05 $1.06 $0.97 $0.32 $0.28 $0.20 $0.73 $0.45 $0.39 $0.30 $0.16 $0.16 $0.07 $0.57 $0.55 $0.54 $0.51 $0.47 $0.43 $0.37 $0.36 $0.35 $0.25 $0.22 $0.19 $0.64 $0.48 $0.42 Australia Brazil Canada China India Japan Mexico New Zealand Russia Singapore Optimizing Mobile Search Campaigns With mobile s rapid growth and reach throughout the globe, it is an important area for marketers to focus their attention. However, advertising on mobile differs vastly from advertising on desktop, and it is important to accommodate for mobile user behavior when creating mobile campaigns. This section covers best practices for mobile devices to help marketers get the most out of their advertising dollar. 1. Ad position: As shown earlier, ad position is critical for advertising in general. However, it is especially important for smartphone advertising due to the constraints of the small screen. Positions 1 and 2 are by far the most valuable positions for ads. Across all devices, click-through rates drop by 50% after position 2, from roughly 5% to 2.4%. 2. Mobile experience: A strong factor for conversion rates is overall user experience. Many websites still lack a robust mobile-optimized experience. Advertisers should ensure that all parts of their conversion path are well-optimized for mobile devices, and specifically smartphones. 3. Mobile conversions: Smartphone advertising tends to have conversions that happen via a non-standard pathway, such as a call or in-store visit. This can lead to difficulties recording these conversions and acknowledging that they are mobileinfluenced. Marketers should look into tracking mobile ad formats like click-to-call and store-locator. If successful, they can better estimate revenue from mobile transactions and adjust budget accordingly. Copyright 2014 Marin Software Inc. All rights reserved. 13

14 ABOUT MARIN SOFTWARE With more than $6 billion in annualized advertising spend, Marin Software (NYSE: MRIN) is the leading digital ad management platform in the world. Offering an integrated platform for search, display, social, and mobile advertising, Marin helps the world s best brands and agencies simplify their advertising workflow while dramatically increasing ad performance. Powering advertising campaigns in more than 160 countries, Marin s technology transforms data into insights and complexity into opportunity for hundreds of global advertisers and agencies. For more information about Marin s solutions, please visit: United States San Francisco 123 Mission Street 25th Floor San Francisco, CA Tel: +1 (415) New York 215 Park Avenue South Suite 1801 New York, NY Tel: +1 (646) Chicago 140 S. Dearborn Street Suite 300-A Chicago, IL Tel: +1 (312) Austin 800 Brazos Street Suite 320 Austin, TX Tel: +1 (512) EMEA United Kingdom 1st Floor, Orion House, 5 Upper St Martin s Lane, London, WC2H 9EA Tel: +44 (0) France Actualis Level 2 21 and 23 Boulevard Haussmann Paris Tel: Germany Am Kaiserkai Hamburg Tel: Ireland Suite Upper Pembroke Street Dublin, 2 APAC Singapore One Raffles Quay North Tower, Level Tel: Japan 3rd Floor, Sanno Park Tower Nagata-cho Chiyoda-ku Tokyo Tel: Australia Level 33 Australia Square 264 George Street Sydney NSW 2000 Tel: +61 (0) Portland A317 SW Alder Street Suite 850 Portland, OR Tel: +1 (971) (415) Mission Street, info@marinsoftware.com 25th Floor San Francisco, CA Marin Software. All rights reserved. Other trademarks belong to their respective owners. WP 134_031214