IAB Report on Search Advertising The Netherlands DRAFT 2015 June 2015
Methodology 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 cross-referenced and validated with selected respondents Final findings are presented to IAB Netherlands and industry participants Research Initial findings from processed data are interpreted by Deloitte and research group members of IAB Taskforce search (Incl. Arjen Hettinga Oogst, Martijn Hazelhorst StormMC, Keesjan Deelstra InternetEffect, Roy Sterken Indenty) Survey methodology Our current report is based on 20 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
Introduction For many years the biggest category in digital advertising is search advertising. In 2014 paid search advertising had a share of 43%* in the total online advertising spend for the Netherlands. In respect to other forms of online advertising, revenue of paid search is monetized by only a few publishers and in depth information about this market is not publicly known. To gain insight into the search advertising market Deloitte, commissioned by IAB Taskforce Search, researches the latest trends in the paid and organic search ecosystem. With data and input supplied by media buyers/agencies and advertisers, this research includes paid search price development and general organic vs paid search behavior. This first time search study for the Netherlands by IAB Netherlands and Deloitte is initially scoped on highly competitive generic keywords for several major industries: Finance, Retail and Travel within Google Search. *IAB report on Advertising Spend 2014 Arjen Hettinga IAB Taskforce Search 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 by our Taskforce to change that situation, by collecting local CPC, position and CTR data and discover trends within the Dutch Search market. This is in line with the main goal of our taskforce: to make the Dutch Search market more transparent and improve the professional level of our industry in general. As a Taskforce 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 Nathalie La Verge Deloitte Digital We are proud to present our first IAB study on Search. During our Partnership with IAB Netherlands we have done several research studies in the digital advertising space, but the Search area was quite difficult to tackle. We see this study as the first step in facilitating all stakeholders in the search ecosystem to become better informed and hope it can help to adapt their strategies accordingly. Although the scope was limited, thanks to the participation of a great number of Dutch players in the Search ecosystem and in cooperation with the IAB Taskforce Search, we were able to collect specific insights in three main industries regarding trends on CPC and CTR s. 3
Executive summary The scope of this research only includes high volume generic keywords during December 2013 and 2014 within Google Search. The keywords are determined by IAB Taskforce Search and its high volume scope verified by Google Netherlands. Prices for high volume generic keywords increased for all selected industries during 2014. Average cost per click* (CPC) for 1 st paid search position increased most for scoped keywords in the Finance sector with +22%, followed by Travel and Retail with a +10% and +7% price increase respectively. Advertisers pay the highest CPC for Finance related keywords with an average of 8,9 for 1 st paid search result position and significant less for Travel and Retail related keywords with a CPC of 1,7 and 0,94 respectively. Advertisers achieve higher click through rate** (CTR) for paid search results in 2014 for keywords in the industries Retail and Finance with top position CTR increasing from 9,4% to 13,3% for Retail and from 15,8% to 18,2% for Finance. The CTR for Travel keywords increased relatively less in respect to 2013 with 1,5 percentage points to a CTR of 15,9% in 2014. Paid search for generic keywords is focused around the top 3 positions. The top 3 positions in paid search realize a higher CTR performance compared to the organic search results and the CTR paid search results drops significantly stronger below the top 3 positions compared to the organic search results. *CPC (Cost per click) Amount spent by the advertiser to get an ad clicked **CTR (Click through rate) The amount of clicks an ad generates divided by the number of viewable impressions. 4
Scope of study This research includes generic high volume keywords for the industries: Finance, Retail and Travel Finance Car insurance (e.g. autoverzekering, goedkope autoverzekering, autoverzekering vergelijken) Health Insurance (e.g.zorgverzekering, goedkope zorgverzekering, zorgverzekering vergelijken) Loans (e.g. geld, geld lenen, snel geld lenen) Mortgage (e.g. hypotheek, maximale hypotheek, hypotheek berekenen) Retail Books & Media (e.g. boeken, ebooks, dvd releases) Electronics (e.g. camera, koelkast, smart tv) Fashion (e.g. schoenen, jurken, bikini's) Home & Garden (e.g. keukens, bloemen, tuinmeubelen) Travel Ticketing (e.g. vliegtickets, goedkope vliegtickets, vliegtickets vergelijken) Hotels (e.g. hotel, hotel boeken, weekend weg) Travel package (e.g. vakantie, zonvakantie, last minute vakantie) 5
Paid search costs CPC development for each industry Average CPC for 1 st position Dec 2014 Dec 2013 Y/Y Growth CPC price development Finance 8,9 7,3 +22 % Mortgage Car insurance Health insurance Loans Retail 0,94 0,88 +7 % Electronics Fashion Home & Garden Books & Media Travel 1,7 1,4 +10 % Travel package Hotels Ticketing Compared to 2013 the cost per click (CPC) prices for all industries in scope have increased. The CPC prices increased most for Mortgages, resulting in the highest growth of average prices for keywords in the Finance industry. The price advertisers are willing to pay is highly correlated to the value of the advertised product, corresponding profit and market pressure. Advertisers in the Finance sector pay the highest CPC for generic high volume keywords more than 5 times that of the Travel sector and even 9 times higher compared to Retail. Source: Survey respondents, Deloitte analysis 6
Position value for paid search results CPC valuation per position for each industry CPC price relative to 1 st position (Dec 2014) 100% 75% Finance CPC prices fall rapidly for each lower paid search position in the industries Travel and Retail. Advertisers in these two industries pay half the CPC price for the 3 th position compared to advertisers paying the top price for the 1 st position. In the industry Finance, advertisers are willing to pay more for all positions. In this highly competitive, high CPC priced market even the 6 th paid search position is valued around half of the price paid for the top position. 50% 25% 0% Travel Retail 1 2 3 4 5 6 7 8 9 10 Position Martijn Hazelhorst - StormMC The limited availability of keywords for Finance in combination with significant levels of competition, leads to the fact that prices decrease less rapidly for lower positions. In practice we often see high CPC prices for all positions regarding financial products, which might be a consequence of the high value of financial products, allowing more advertisers to follow aggressive bid strategies in a viable manner. Source: Survey respondents, Deloitte analysis 7
CTR development for paid search results CTR for paid search position during December 2013 and 2014 CTR 20,0% 17,5% 15,0% 12,5% 10,0% 7,5% 5,0% Finance Retail Travel Paid CTR Dec 2014 Paid CTR Dec 2013 For paid search the click through rate (CTR), one of the most important performance indicators in search, shows increasing numbers over time. CTR depends on many variables: The relevance and quality of the meta tag (e.g. an advertiser with a higher CTR due to a more relevant result on the performed search can get a higher position over competitors bidding more CPC) The presence of sponsored content between the search results such as Google Flight Finder for Travel keywords and Google Shopping (Product listing) for Retail keywords. The number and layout of paid search results within the search result page (e.g. the number of paid search results differs by keyword and through the amount of running campaigns by advertisers) 2,5% 0,0% 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 Position Source: Survey respondents, Deloitte analysis 8 Arjen Hettinga Oogst Online The average top-of-page CTR for generic keywords is around 15%. We see however, that in a year on year comparison the CTR is increasing for paid search top positions. The growing emphasis on Paid results, and Paid snippets in particular, in the overall page SERP layout directs more and more traffic towards paid positions.
Organic vs paid search CTR during December 2014 for organic and paid search results CTR 20,0% 17,5% 15,0% 12,5% 10,0% 7,5% 5,0% 2,5% 0,0% Paid CTR Organic CTR 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 Position Finance Retail Travel The top 3 position in paid search achieves better CTR performance for Finance and Retail keywords and similar performance for Travel keywords compared to organic results. Paid search is focused around the top 3 positions as below the 5 th position organic searches achieve higher CTR due to the strong drop CTR in performance for lower paid search positions. For the organic search results on page 2, average CTR is around 3%, with a small increase in CTR for 1 st position on page 2 with around +3% percentage points. However the number of impressions quickly declines and generates less traffic than the positions of page 1. Keesjan Deelstra - InternetEffect The Organic results are inline with international studies, since all chosen words show Google ads. In general overall paid results generate a higher CTR on the top 3 positions in comparison to the organic top 3 positions. Mainly within retail we see a higher CTR because of Google shopping. In Travel, organic is the winner of the top 10. Source: Survey respondents, Deloitte analysis 9
Methodology 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, 20 companies* contributed to this study, including: Oogst, StormMC, S&D Interactive, Zoover, Traffic Builders, Clever Online Marketing, ClickValue, Yonego, RED Online Marketing, Maxlead, ING, Rabobank, ANWB and Traffic4u. Dataset: Multiple data points for 64 generic high volume keywords for Finance, Retail and Travel. Weighted nonlinear least squares fitting (model based on best fit): CTR (Position) = B Position 1 A e + CPC (Position) = n i=0 C 1 n A i e B i Position 1 Industry categories (i = 0,1,...,n) Weights (SEO only) = Spend / CPC Finance CTR A B C Paid Dec 2013 0,158-0,35 0 Paid Dec 2014 0,182-0,35 0 Organic Dec 2014 0,133-0,82 0,039 Retail CTR Paid Dec 2013 0,094-0,32 0 Paid Dec 2014 0,133-0,32 0 Organic Dec 2014 0,088-0,53 0,031 Travel CTR Paid Dec 2013 0,146-0,36 0 Paid Dec 2014 0,159-0,36 0 Organic Dec 2014 0,136-0,53 0,027 * 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 10
Contact For questions concerning this research feel free to contact: Nathalie La Verge Deloitte Deloitte Digital Tel: +31 (0)6 23 367 886 Email: nlaverge@deloitte.nl Nathalie La Verge is a manager with the Risk Services practice from Deloitte 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 Netherlands. Govaert Plesman IAB Nederland Tel: +31 (0)85 401 0802 Email: govaert@iab.nl Dutch IAB research includes the IAB Netherlands/ Deloitte Ad Spend Study, all IAB commissioned research, and assisting Dutch IAB members with their research projects. Also responsible for shaping the IAB knowledge base so that it meets members' needs moving forward. Jorrit Sloot Deloitte Deloitte Data Analytics Tel: +31 (0)6 82 019 387 Email: jsloot@deloitte.nl Jorrit Sloot is a Consultant within the Deloitte Risk Services practice and specialized in risk analytics, data modeling, mathematical and quantitative data analyses for the Digital industry. Jorrit has supported the research of all IAB Ad Spend/ Programmatic and Search studies since 2013. Philip Spaas Chairman IAB Taskforce Search Tel: +31 (0)20 715 5220 Email: philip@oogstonline.nl IAB Taskforce Search consists of the major search marketing agencies in The Netherlands. Their mission is to promote the knowledge, transparency and innovation in the Dutch market for search engine marketing, both SEO and SEA. IAB Taskforce Search organizes events, initiates market research and promotes education. 11
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