Earlier this month, Facebook announced a new social-based home screen experience for Android devices called Home. Though Facebook has insisted that they aren’t developing a new phone or operating system, Home certainly comes close and stands to change the way consumers and advertisers engage across Android phones and tablets. Let’s take a look at how Home’s immersive experience will impact the way advertisers engage on-the-go, social consumers and what risks stand in its path to success.
What Does Home Do For The Consumer Experience?
According to Mark Zuckerberg, the goal of Facebook Home is to “transform your Android phone into a great social device.” To do this, Home unifies the user’s News Feed, messages, and notifications on the home screen of any Android device. This friends-first experience makes Facebook messaging the centerpiece of communication, reducing the need to use voice or texts to engage with your social circle. Because of this intimate and socially-immersive environment, Home differentiates itself from any other smartphone experience in the market. As a result, it’s caught the attention of social advertisers as a new and highly relevant way of engaging their customers.
How Does Home Impact Advertisers?
With users spending more time on their mobile devices, and with more competition from other forms of entertainment and communication like music, gaming, video, and texting, Facebook has felt the impact of an industry shifting to mobile consumption. However, even with consumers’ fragmented attention, the average Facebook mobile user in the US still spends an average of 30 minutes per day on the Facebook app. Home is primed to dramatically increase this level of daily Facebook engagement, and this is great news for advertisers. Marin believes that Home will:
What Risks Does Home Face?
Home will be an uphill battle for Facebook with multiple risks involved. With development resources committed to monthly updates and a tablet version still in the works, Home could limit Facebook’s focus on their mobile app, impacting the user experience for the vast majority of Facebook’s users and slowing down innovation within the app. Additionally, Home might not scale. Competing with Apple and Samsung won’t be easy, since these companies have figured out their distribution models and have developed a loyal following. Finally, Google could change their licensing agreement for Android, making it difficult for Facebook to continue innovating on Home. Though it remains unclear if these risks will become a factor, for now, Home remains an intriguing piece of mobile technology that will undoubtedly have the attention of advertisers throughout 2013, and possibly longer.
Over the last three years, the rapid proliferation of tablet devices has changed the way consumers and advertisers interact across the search landscape. Consumers now rely on their tablets more than ever before to gain access to local business information, product details, reviews, coupons, and competitors. And advertisers responded with relevant ads targeted towards these tablet users.
However, the way these devices are used by consumers today has resulted in a seismic shift in thinking by Google. In an effort to simplify the management of paid search campaigns across devices, location, and time of day, Google upgraded AdWords with enhanced campaigns in early February. According to Google and their data, the line between desktops and tablets is blurring, with search behavior and engagement on the two devices aligning.
A recent 2013 mobile report: The State of Mobile Search Advertising – How Smartphones and Tablets are Changing Paid Search released by Marin Software supports Google’s claim that consumer behavior on tablets and desktops share increasing similarities. However, the data also validates the perception that desktops and tablets are inherently different and perform accordingly so. Regardless, to remain successful in a multi-device world, search marketers must embrace enhanced campaigns and continue delivering a relevant and engaging ad experience.
What Does the Data Say?
Over the last two years, tablets have become a device segment that search marketers can’t ignore. In fact, the share of overall paid search clicks served by Google on tablets increased from 6% to 10.7% in 2012. Consumers are increasingly using tablet devices to research and make purchases on-the-go and, more importantly, in the comfort of their home where desktop devices have traditionally reigned. Marin projects that by the end of 2013, the share of tablet clicks will double in the US, accounting for 20% of Google’s paid search clicks.
In 2012, paid search conversion rates for tablet devices increased by 31%, while smartphone and desktop conversion rates increased by 9% and 7%, respectively. By December 2013, Marin estimates that tablet conversion rates will surpass those of desktops. In addition to this rapid rise in conversion rate, Marin also found that tablet ads are continuing to outperform desktop ads. Click-through rates (CTR) for search ads on tablets were 37% higher than ads delivered on desktops, with the average cost-per-click (CPC) on tablets 17% lower than on desktops. As a result, advertisers increased paid search spend on tablets to capitalize on this opportunity; and by the end of 2012, the share of spend on these devices had increased to 10%, eclipsing the share of spend on smartphones for the first time in history.
Different, But Equal
Tablets will certainly play a crucial role in the future of paid search, but whether the line between desktops and tablets will continue to converge and blur, or diverge and remain distinct, has yet to be seen. Even though these two devices share similarities in search behavior, they continue to perform differently. Perhaps this is a result of their unique user experiences—desktops with their large screens, mouses, and primarily fixed locations; versus tablets and their touchscreens, smaller search real-estate, and portability. Marin’s mobile report appears to support the notion that different user experiences result in varying ad performance. As a result, we expect Google’s enhanced campaigns to evolve as the market demand for additional functionality becomes evident.
The New Multi-Device World
With the migration to enhanced campaigns underway, search marketers must now prepare for a desktop-and-tablet-combined world. Gone are the days of separating campaigns to target these devices individually. Campaigns and landing pages must now be optimized with both the desktop and tablet user in mind. Two strategies that marketers are implementing today include: limiting the amount of Flash-based content on websites, as iPads don’t support Adobe Flash, and using finger-friendly buttons and links.
In an already highly competitive search landscape, enhanced campaigns will change the way advertisers engage with consumers. Sophisticated search marketers will need to continue investing in technology and reestablish best practices in order to successfully drive media and acquire revenue in the new multi-device world.
Download the comprehensive 15 page global mobile report here.
Last week, our mobile report caught the eyes of many journalists, including the Wall Street Journal. However, Wired’s interpretation of the data gave me pause to think further on the trend of consumers ditching their desktops and laptops in favor of tablets. As Michael Copeland points out, tablets are no longer just for watching movies while on the train home, checking emails, or passing the time with Angry Birds. As the power and performance of tablets increases and bandwidth becomes more available, firing up the ‘ol tower computer is becoming a thing of the past. Our data certainly supports the notion.
Tablets are the future that much seems certain, but in a post Google enhanced campaigns world where tablets and desktops are “equal”, which one drives the innovation? Prior to enhanced campaigns, the two devices were treated as separate. Ad innovation for desktops progressed along its own path while tablets were busy carving out one of their own. Now that both are AdWords roomies, will future ad innovation be of a desktop lineage or part of the tablet revolution? The two devices and their user experiences certainly aren’t the same; computers with their large screens, mouses, and primarily fixed locations versus tablets and their touch screens, smaller search real-estate, and portability. Does Google continue to favor market share? If so, for how long? Or, do Google and tablets become BFFs?
Only time will tell.
There’s no doubt about the increasing proliferation of mobile devices in the UK. In October 2012, Comscore reported that smartphones had a 62% penetration in the UK. YouGov also reported that there will be a staggering 10 million tablet users in the UK by August 2013, nearly one-sixth of the population. However, as gadget obsessed British consumers spend an increasing amount of time on their mobile devices, what impact does that have for advertisers? Well, Marin decided to take a look into this, and published our findings in our report, “Mobile Search around the Globe”.
The UK has the highest share of mobile clicks globally
In the UK, 24.4% of paid search clicks came from mobile devices, compared to 23.4% in the US, 22.5% in Singapore, 21% in Australia, 16.2% in Japan. The UK’s closest neighbours in the Eurozone saw 14.5% of paid search clicks coming from mobile. With the high penetration of mobile devices in the UK, consumers are increasingly conducting searches and clicking ads on mobile devices. But how are advertisers reacting?
While consumers lead the way, advertisers still lag
Despite consumers in the UK having the highest percentage of mobile clicks globally, UK advertisers are second behind their Singaporean counterparts in terms of budget allocation. Advertisers in Singapore allocate 20% of search budgets to mobile devices, while those in the UK allocate 19.3%. This still puts the UK ahead of the US with 18.4%, and the Eurozone with 11.8%. However, what is preventing UK advertisers from aligning their mobile search budgets with consumer behavior?
Advertisers struggle to track smartphone conversions
Whilst UK advertisers see impressive click-through rates on smartphones (5.87%) and tablets (3.93%) compared to desktop computers (2.29%), the Cost-per-click (CPC) suggest that advertisers aren’t investing as much in smartphones. CPC, which is a good indicator of how competitive the marketplace is, show that tablet searches are as competitive as desktop searches with average CPCs of £0.28 and £0.30, respectively. However, smartphone searches have fallen behind with an average CPC of £0.15.
The reason behind this is that advertisers believe conversion rates are lower on smartphones relative to computers and tablets. Despite efforts by advertisers to improve the mobile user experience, conversion rates remain slightly lower on tablets (2.6%) and smartphones (1.6%) compared to computers (4.1%).
Consumer “Showroom” to find the best deals
With smartphones performing worse in terms of conversion rate, advertisers are reluctant to increase their investment in these devices at the same rate as they are for tablets. However, there is another challenge that advertisers need to address—the growing trend in the UK, termed “Showrooming”, where consumers compare prices and research products on their smartphone while in a bricks and mortar store. This often results in consumers making purchases offline despite having researched those products on their smartphone. In 2013, we anticipate that many UK advertisers will look to address this challenge by utilizing voucher codes within smartphone search ads that consumers can redeem offline.
What should we expect in 2013?
The global adoption of mobile devices is dramatically changing the paid search landscape. This is especially true for tablets. Marin’s findings note that tablets will continue driving a larger share of paid search ad clicks in 2013. And with consumers increasing their use of tablets to research goods and services, and make purchases, Marin predicts that tablet conversion rates will surpass those of desktop computers by the end of 2013.
Marin Software is excited to announce the release of our 2013 mobile benchmark study, a compelling summary of mobile advertising data trends and best practices. The staggering adoption of mobile devices is dramatically changing paid search, especially the emergence of tablets. The report’s findings note that tablets will likely drive 20% of Google’s paid search ad clicks in the US by December 2013. Fueled by consumers’ increasing use of tablets to make purchases and research goods and services online, Marin predicts the conversion rate of search ads originating from tablets will eclipse those of desktops before year end.
The rapid adoption of mobile devices over the last two years is changing not only how customers engage with advertising channels, but also how online marketers are allocating their advertising budgets. As online marketers are pushing more discretionary spend towards mobile advertising on smartphones and tablets, they need to think more about how they’re optimizing the mobile experience for their on-the-go customers. To help tee up this discussion, Gagan Kanwar, Marin’s Director of Research, sat down and shared three tips on mobile paid search advertising.
There’s no doubt that mobile search has had a groundbreaking year, gaining plenty of industry attention throughout 2012. Our Q3 2012 data found that search clicks on mobile and tablet devices accounted for 19% of total search clicks from June-August. At the same time, another trend has dominated the headlines in the retail industry as sales in physical high street stores have suffered, with well known offline retailers like Comet going into administration. Since 2000, online shopping has grown 7,300% (IMRG). The challenge for high street retailers has been driving footfall into their physical stores, as shoppers take to their laptops, tablets and smart phones to make purchases.
Mobile and In-Store Convergence
In December, these two trends will converge to create a huge opportunity for bricks and clicks retailers. Our Q3 Christmas Shopping Report for the UK identified that in 2011 mobile search clicks grew from 11% of all search clicks at the beginning of the festive shopping period in October, to 15% in December. As retailers were no longer able to deliver internet orders after mid-December last minute shoppers took to the high street, researching purchases on their tablets and mobile devices as they went.
This trend of high street shoppers using their mobile devices offers two scenarios for advertisers using mobile advertising in combination with a physical store:
The immediacy and urgent nature of these two categories of searchers makes them of a higher propensity to convert, meaning they’re high-value customers to advertisers.
How Can Advertisers Capitalise On This?
An effective paid search mobile strategy starts by separating out mobile and tablet from desktop-targeted campaigns. This results in two significant advantages. First, ad position is far more critical on mobile devices where real estate is limited. To increase mobile traffic and conversions during the festive period, leverage position-based bidding to ensure that ads are delivered within the top three positions. Second, include location ad extensions to quickly point on-the-go mobile shoppers to your nearest store location. Furthermore, consider the use of voucher codes in mobile ads during this period to draw more attention to your ads and promote engagement. In-store voucher redemption will enable you to track the effectiveness of your mobile advertising in driving offline conversions.
Read more about the state of mobile search advertising in the UK and how the emergence of smartphones and tablets changes paid search, here.
The Marin Customer Spotlight series profiles industry leaders and provides an informed perspective on current topics and trends. Last week, Katie Kieft, Search and Analytics Specialist at Fuor Digital, sat down with us (virtually) to discuss the state of mobile advertising and share a few industry best practices.
Marin: What are your thoughts on the current state of mobile advertising? Do you feel this growing segment of consumers is only available or profitable to a specific set of industries/verticals? What are your thoughts on the disparity between smart phone and tablet performance within the mobile segment? Do they require separate strategies?
Katie: In short, mobile advertising today is nowhere near where it is going to be in 5, even 2, years. One thing for certain, however, is that the slow progression mobile advertising has seen is certainly not from lack of effort. Advertisers continue to innovate, test, explore, measure the new technologies and advertising opportunities that come with this exponentially growing mobile segment. Currently, mobile search seems to have been adopted and proven successful faster than newer mobile advertising channels, possibly due to the ability to apply knowledge and best practices from desktop search to mobile search. The growing mobile segment—smart phones making up over 50% of the US cell phone population and tablets continuing to grow exponentially—is certainly large enough to offer availability/profitability to all industries. In my opinion, what’s more important than industry or vertical when predicting mobile advertising availability/profitability is how well developed a company’s mobile infrastructure is. For instance, a restaurant with a well-designed mobile site will most likely be much more successful with mobile advertising than its counterpart who does not have a mobile site. The user experiences and user behaviors between smart phones and tablets are just as different as they are between desktop and smart phones, so it is no shock that performance is different as well. Just as mobile and desktop strategies should be customized, having separate strategies for smart phone and tablets is definitely something that should be considered, if not done automatically.
Marin: Mobile device (smart phones and tablets) adoption and usage continues to grow with performance comparable to and sometimes surpassing that of desktops. What paid search strategies are you putting in motion to capitalize on this growing opportunity? How has Marin helped you in executing on these strategies?
Katie: The copy feature in Marin has really made duplicating desktop campaign structures to run on smart phone or tablet devices very easy and has been a big time saver. In regards to smart phone advertising specifically, we understand how much more important being in 1st position is, and with Marin’s bid override feature it is possible to bid to position automatically. This feature not only saves time but also has proven effective in improving performance.
Marin: If you could only recommend one mobile paid search best practice, what would it be and why?
Katie: Always separate smart phone and tablet device campaigns. As previously stated, smart phone, tablet, and desktop usage and experience are all unique and require separate strategies. In order to successfully run separate strategies, the campaigns must first be physically separated in the search account by targeted device. Without proper account structure, other mobile best practices will be harder to implement and campaign management will become more difficult, hence the reason I would recommend this best practice over others.
Earlier this week, Facebook announced the ability for direct advertisers and agencies to buy sponsored stories* on mobile devices, exclusively. Prior to this, Facebook controlled whether or not an advertiser’s sponsored story would appear in a user’s news feed for mobile devices. Furthermore, marketers had no choice in when their sponsored stories were shown and no means of segmenting out the performance by desktop and mobile. For those familiar with Google AdWords advertising, this new Facebook functionality is equivalent to desktop and/or mobile device targeting for paid search campaigns.
The sponsored stories targeting options now available through the ads API and Power Editor are:
What does this mean for Facebook and their advertisers? This change certainly provides marketers with more control over their ads and visibility into their data for optimizing campaigns. But to anyone familiar with advertising, this also means more ad revenue for Facebook. Consider these figures: Facebook made $3.2 billion in ad revenue last year, primarily from desktop advertising. And as of December, there were 901 million monthly active users, with 500 million of those being mobile. With the flood gates now open for sponsored stories on mobile devices and the continued growth of monthly active mobile users, it’s clear that Facebook is set to generate hundreds of millions, if not billions, of dollars in revenue from this untapped mobile ad market.
Though this announcement appears to be a win-win for Facebook and their advertisers, it remains unclear as to how mobile users will react to seeing these new ads in their news feeds. As a thought, Facebook may want to consider providing more visibility into the algorithm that influences the ads appearing in a user’s news feed, such as click-through-rate. This algorithm might be similar to Facebook’s existing EdgeRank, which factors Affinity, Weight and Decay into the ranking of social content appearing in news feeds. Developing a transparent and effective metric to promote ad relevancy would benefit marketers and Facebook users in a landscape of dynamically changing content and consumer intent.
Share your thoughts with us on this announcement in the comments section below.
*Sponsored stories allow Facebook advertisers to surface word-of-mouth recommendations about their brand that exists organically in the Facebook News Feed. Sponsored stories are different from ads and can amplify the brand engagement of the target audience. For example, if a person’s friends like a Page, in addition to seeing that news story in their News Feed, they can also see the same story on the right-hand column. Sponsored stories are available for ads that promote a Page, Place, Application or Domain.
Consumers are increasingly using their mobile and tablet devices to perform searches. According to Marin’s most recent research, mobile devices accounted for 15% of all UK paid search clicks in December 2011. As mobile devices become more proliferated, tablets, smartphones, and desktops are requiring separate targeting and optimisation strategies to be successful. The first step is to separate the campaigns. Separate campaigns will allow you to bid, target and optimise to the nuances of mobile ad formats, such as higher click-through-rates (CTR), different time of day trends and lower cost-per-clicks (CPC). This gives marketers more control over search campaigns and ultimately drives higher overall performance.
Separate device targeting will also allow you to optimise bids based on when your consumers browse on different devices. For example, a consumer may use his or her smartphone to search in the morning on his or her way to work, research further on a desktop at lunchtime and convert on a tablet device while watching TV in the evening. Consumers in your vertical may behave differently across devices. To optimise paid search activity for your consumers’ device behaviour, follow these two steps:
Analyse your data for varying volume and conversions through the day on the separate devices. For times/hours where you experience higher conversion rates on certain devices boost your position and drive more traffic for those devices. Reduce position for time periods with lower conversion rates. Each advertiser will have slightly different business goals, so you need to look at the times where a boost or de-boost will improve the performance of your key performance indicators (KPIs).
By looking at the average time to purchase and testing how different boost timetables work on certain devices–such as boosting when consumers are in the research phase–you can improve your hourly strategy to maximise performance. Device path-to-conversion information will help towards achieving this. Moreover, it’s worth looking at your day-of-week trends to find more signals to optimise to.
In the UK, the average CPC on a smartphone is roughly half that of a corresponding desktop click, while tablet CPCs are just over two-thirds the cost of a desktop click. With these favorable advertising conditions, following these simple steps will put you ahead of the curve and provide significant improvements to your paid search program.