RKG Q2 2013 Report: Google Maintains Robust Search Spending Growth as Click Costs Accelerate

Enhanced Campaigns Having Only Minor Impact on Overall Trends

RKG, a leading full-service digital marketing agency, released its Digital Marketing Report covering the second quarter of 2013 today.   Across its client base, which includes over 40 of the top 500 online retailers, RKG found that Google search spending grew nearly 18% year over year as average cost per click rose 10%.

While many industry watchers are expecting Google’s new Enhanced Campaign model to bolster the search giant’s growth by driving up mobile competition and click costs, RKG results suggest the impacts of the change have been minor to date for larger advertisers.

According to RKG Director of Research, Mark Ballard, “Smartphone CPCs did gain ground on desktop in the second quarter, but that only contributed about one percentage point to Google’s total growth in click costs.”

Looking ahead, Ballard noted “While there may be increased volatility over the next month as the mandatory transition date for Enhanced Campaigns passes, there’s no reason to believe a smartphone click will suddenly become much more valuable.  Advertisers will need to keep their CPCs in check in order to keep hitting their ROI targets.”

Although smartphone traffic continues to be a net drag on total CPC growth, with average click costs 40% lower than desktop, it is still providing a large lift to total paid search click and spending growth.  While desktop clicks were down 7% year over year in Q2, smartphone clicks rose 179% and tablet clicks rose 115%.

Mobile Devices Generating a Wide Range in Value for Advertisers

RKG’s data on the average revenue per click generated for different mobile devices offers insight into why smartphone CPCs remain well below those for traditional computers and offers a compelling counterpoint to the notion of device convergence.

As a group, smartphones generated an average revenue per click (RPC) that was 78% lower than desktops.  Even within the tablet device class, RPC exhibited a high degree of variance across specific models in Q2.  Clicks by shoppers using the iPad were over twice as valuable as clicks from shoppers using the Kindle Fire.

Download the full report at:

http://resources.rimmkaufman.com/RKG-Digital-Marketing-Report-Q2-2013.html

The full RKG Digital Marketing Report  offers over 40 charts with additional insights and analysis on paid search, search engine optimization (SEO), social media, comparison shopping engines, multi-channel attribution and more. RKG senior leadership is available for interviews and deeper discussions of the data presented.

Among their published second quarter results, RKG found:

  • Google paid search spending growth decelerated slightly to 18% Y/Y.  After nearly unprecedented CPC declines and click growth in 2012, advertisers are seeing a reversal with CPCs up 10% in Q2 2013 and clicks up 7%.
  • Bing Ads search costs rose 58% Y/Y in Q2, the third quarter in a row where its growth rate more than doubled that of Google.  Bing’s growth has been driven by a surge in non-brand clicks, which rose 49%, while ROI has remained stable.
  • Tablets and smartphones drove 28% of paid clicks and combined for 22% of spend.  With desktop and laptop clicks down 7% year over year, 178% growth for smartphones and 115% growth for tablets drove total clicks up 12%.
  • Smartphone CPCs accelerated from 55% of desktop levels to 60% as more advertisers transitioned to Google Enhanced Campaigns.  The impact to total CPC growth was negligible though.
  • Tablets generated an average revenue per click that was 8% lower than that for desktops and laptops, while smartphone RPC was 78% lower.
  • Google Product Listing Ads generated 33% of paid search clicks in Q2 at CPCs that were an average 10% lower than non-brand text ads.  PLAs continue to be a large growth driver in the retail space with some sites seeing 50-60% of their Google spend going to the format.
  • Analytics packages misattributed an estimated 14% of Google organic searches on average in Q2 due an issue with iOS 6 searches not passing referring URLs.
  • Across all engines, 26% of organic search visits took place on tablets and smartphones.  On both Google and Yahoo, nearly 28% of visits were mobile, while Bing’s mobile share trailed at 13%.
  • iOS devices accounted for an estimated 18% of organic search visits.  Android devices generated 7%, while all other mobile devices accounted for a little less than 1%.
  • Facebook’s share of social referrals to sites was 58% in Q2, far ahead of other players in the space.
  • Despite concerns about its new $4 minimum bid policy, Shopzilla CPCs were down slightly.  Across other engines, CPCs were also flat to down from quarter to quarter.

Coverage of the RKG DMR for Q2 2013:
SearchEngineLand
MediaPost

About RKG

RKG is a search and digital marketing agency that combines superior marketing talent with leading edge technology to create the industry’s most effective data-driven online marketing solutions. Founded in 2003, RKG specializes in working with clients in retail, travel, financial and B2B organizations ranging in size from small startups to Fortune 500 companies.

In 2013,  Advertising Age ranked RKG the fastest growing top 25 U.S. search agency in their 2013 Agency Report.  A privately held company, RKG is headquartered in Charlottesville, VA with offices in San Francisco, CA, Bend, OR and Boston, MA.For more information visit www.rimmkaufman.com or follow the company on Twitter: @rimmkaufman.