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 just released our latest online advertising trends report for Q4 2012 in the UK. As with previous quarters, we built this report using the Marin Global Online Advertising Index, which includes over $4.0 billion invested annually in biddable media by advertisers and agencies through the Marin platform. As we are freshly in the New Year, I just wanted share three of the key trends we identified in the UK:
1) Advertisers Investing More on Tablets than Smartphones
According to Ipsos Mori, 50% of adults in the UK own a smartphone while just 13% own a tablet. Yet despite this, we found that advertisers invested more on search ads targeted towards tablets in the fourth quarter. We identified that tablets accounted for 11% of UK search spend, compared to 6% for smartphones. Our findings indicate search ads on tablets have a higher conversion rate than smartphones and a lower cost-per-click (CPC) relative to desktop ads, making them an attractive investment. Prior to the fourth quarter of this year, investment in tablet advertising had lagged that of smartphones. If you are in need of best practices for managing smartphone or tablet campaigns, be sure to check out Gagan Kanwar’s helpful video on this.
2) Clicks & Competition Increase Year Over Year (YoY) on Google
On a YoY basis for Google advertisers, we saw a 24% increase in click volume, a 14% increase in CPC, and a 10% decrease in click-through rate (CTR) during the fourth quarter. This suggests that despite more consumers turning to Google for their festive shopping, more advertisers are increasing their investment on Google PPC advertising as it continues to deliver results during the festive shopping period.
3) Advertisers & Consumers Increase YoY Yahoo & Bing Activity
For Yahoo and Bing advertisers, on a YoY basis, we saw a 25% jump in click volumes accompanied by a 22% increase in CPC and a 13% increase in click-through rate during the fourth quarter. This suggests that consumers increased their usage of Yahoo & Bing during the festive shopping period, whilst advertisers also increased their YoY investment in the combined platform throughout Q4. Interestingly, CTR also increased compared to Google where we saw a decrease in CTR. There could be a number of reasons for this. Despite advertisers increasing their investment in Yahoo & Bing, there might not be an increase in the actual number of advertisers competing for the increased number of clicks, rather the same advertisers boosting their investment. It could also be as a result of Marin’s advertisers improving their keyword targeting or ad creative on the combined Yahoo & Bing platform.
All in all, Q4 2012 saw a large uplift in nearly all key PPC stats, with more consumers taking to search engines to find Christmas gifts, and advertisers investing more money in attracting those consumers via search engines. It will be interesting to see how quickly tablet penetration increases this year. Expect the percentage of search budget allocated towards targeting tablet users to increase alongside the adoption of tablet devices by consumers.
You can download the full Q4 Online Advertising Report for the UK here.
We took a comparative look at ad engagement for 2013/2014 during Novembers busy shopping season. Here's what we found bit.ly/1DiwOKN