Compelling Trends from Marin’s 2012 Q1 Report

By Kye Mou April 13th, 2012

Marin is proud to announce the release of our 2012 Q1 online advertising report. This report, which identifies significant year-over-year paid search trends, was compiled using data from over 1,500 advertisers and agencies who invest over $3.5 billion annually in online advertising through Marin.

At a glance, our study revealed an increase in click-through-rate (CTR), with cost-per-click (CPC) remained relatively steady. More specifically, we found a significant increase in CTR and a drop in CPC on Google. Some of our key findings include:

• 46% increase in Google click volume
• 14% increase in CTR on Google
• 4% increase in the share of clicks coming from Exact match

So what does all this mean? The increase in CTR coupled with a 12% lower CPC points to Marin users increasing their efficiency on Google. This finding is further validated by the increased usage of exact and phrase match type keywords, as users continue to identify and fill gaps using Marin’s keyword expansion tools.

Device targeting, specifically smart phones and tablets, continues to soar in popularity. Increases in click volume give evidence of the growth in consumer adoption. With smart phones and tablets showing higher CTRs and lower CPCs compared to desktops, mobile search should continue to be top of mind for advertisers.

Want to see other Q1 industry trends from 2012 with our recommendations? Download the full report here.

Bullish on Google?

By Gagan Kanwar January 20th, 2012

Yesterday, Google released its earnings for the fourth quarter of 2011. On the whole, it was a strong quarter for the digital advertising giant. But Wall Street reacted in a way that seems counterintuitive. Since the earnings’ call, $18 billion has evaporated from Google’s market cap as share prices fell ~8%. So, what’s happening here? Is there really cause for concern? Or are Wall Street’s concerns overblown?

To get a more complete picture, let’s look at the relevant pieces of Google’s business and performance.

The Big Picture

Google’s revenue for the fourth quarter was $10.6 billion, representing a year-over-year (y/y) top line growth of 25%, and marking their first $10 billion plus quarter. Though I usually don’t wax poetic over corporate financials, there is something strongly significant and symbolic about having hit the rarefied $10 billion quarter club. Way to go, Googlers!

Google’s Core Search Business

Click Volume – Paid clicks were up 34% annually (y/y), implying more users are more engaged with Google.

CPC – Cost per Click declined 8% on a y/y basis, implying customers are getting more volume (clicks) for their advertising spend. This dynamic is important to keep in mind as cheaper clicks are better for advertisers, and assuming click quality doesn’t decline, will lead to increased investment in Google.

Wall Street’s Reaction

There’s probably more to dissect in these earnings, but this is probably a good place to pause and examine Wall Street’s reaction.

To put it plainly, Wall Street didn’t like any of the above. Shares plummeted ~8%. The big issue for Wall Street (based on the nature and frequency of analyst questions) was around the decline in Google’s average cost per click.

But this shouldn’t really be a factor because the marginal cost of a click (for Google) is zero. And assuming that click volumes are rising faster than changes in the cost per click, which they are in this case, Google’s top line revenue shouldn’t really see an impact.Net net, if cheaper clicks brings more advertisers on-board, than Google will more than make up on volume.

To be fair, I’m not looking at the slowdown in Europe or issues around currency (F/X) hedging in this blog post. (I’m also not looking at the positive impacts of mobile, social and display) But, those issues are a) extrinsic and b) volatile, and in retrospect, Wall Street may have over-reacted to Google’s numbers.

This Year, Holiday Advertisers Got a Deal on Black Friday and Cyber Monday

By Matt Lawson November 30th, 2011

In the wake of another historical early holiday shopping weekend, we thought it interesting to take a look at how search marketers faired from Thanksgiving through Cyber Monday. Here’s what we found compared to 2010:

• 30% increase in paid search impressions
• 118% increase in paid search clicks
• 44% increase in paid search spend
• 68% increase in click-through rate (CTR)
• 34% decrease in cost-per-click (CPC)

So what’s it all mean?  The dramatic increase in clicks and click-through rate compared to the more moderate increases in impressions suggest a significant change in consumer behavior.  Either advertisers have managed to make their ads more relevant and appealing, or the search engines have come a long way in improving their matching algorithms.  Most likely, it’s a little bit of both.

In our Q3 benchmarking report, we detailed a trend of rising click-through rates for large-scale advertisers over the past couple of quarters.  This shift has occurred in large part as advertisers expand their use of phrase and exact match keywords – improving relevance and click-through.  This shift in match types would also explain why click volumes rose faster than spend, resulting in lower costs-per-click for search marketers.  If that trend continues throughout the remainder of the season, it will be a happy holiday indeed for advertisers and shoppers alike!

Paid Search Spend Up; Advertisers Getting More Efficient

By Matt Lawson July 7th, 2011

Today, Marin Software released the latest Paid Search Quarterly Benchmarking Report. The report analyzes data from more than 800 large-scale advertisers and agencies that collectively spend in excess of $2 billion annually on paid-search. From the report, we not only see year-over-year paid search spend is higher but advertisers also appear to be operating more efficiently.

Spend for our average advertiser in Q2 2011 is up 20% compared to Q2 2010. Click-through rates also increased by 12% while costs remained relatively flat. Things get interesting, though, when taking a closer look at what went on with Google. On a year-over-year basis the average advertiser on Google experienced a 15% drop in impressions, which by itself could be cause for panic. However, during the same period we saw an 8% increase in clicks. Essentially, consumers saw fewer ads but clicked on ads more.

So, either Google changed its algorithm for matching ads to queries (wouldn’t be the first time) or search marketers enacted measures to improve efficiency. During the last year, the share of paid clicks on Exact and Phrase match keywords increased 10%. Exact and Phrase keywords have higher click-through rates and lower costs compared to Broad match terms, leading us to suspect the drop in impressions accompanied by an increase in CTR and a flat CPC could be a result of traffic shaping and quality improvement initiatives. Would you agree? Have you noticed an increase in CTR over the last year by focusing more on Exact and Phrase keyword match types?