Just a few weeks out from Google's mandatory enhancement deadline, RKG is already driving much better returns on mobile for some clients. While we had been testing and transitioning to Enhanced Campaigns over the past several months, many clients began to enhance at higher rates in late June as we finalized upgrades to RKG's Adaptive Portfolio Bidding® to optimize mobile modifiers at the ad group level.
Looking at one long-standing and well-established RKG client, we've been able to increase mobile traffic while simultaneously decreasing mobile CPCs in an effort to increase their profitability on mobile. The decrease in mobile CPCs was actually predicted by our very own Mark Ballard in a Search Engine Land blog at a time when many in the industry were predicting just the opposite.
In the graph below, the gray line on week 7 denotes our first full week of automated mobile modifier bidding after manually bidding them during the previous weeks as we collected data and evaluated the adjustments our bidding system would be making to the modifiers once fully activated.
Prior to automated bidding, this client was seeing mobile CPCs right around 50-60% of desktop CPCs, which most industry reports have indicated is the norm. In just the first two weeks of fully automated modifier bidding, however, we've increased traffic by 25% while paying about 45% less per click compared to week 1.
Even more impressive have been the resulting increases in sales and return on investment (ROI) that RKG has driven by buying higher value clicks at a lower cost. Check out the graph below for the same client over the same time frame.
ROI more than doubled in week 7 compared to week 1, while sales increased by over 40%. More traffic, more sales, better return on ad spend.
Mobile Bidding before Enhanced Campaigns
While this data indicates the awesome power of using smart bidding to adjust mobile modifiers, it also highlights how difficult fully capitalizing on mobile traffic was using Google's legacy campaign model.
RKG's Q2 marketing report showed mobile revenue per click to be just 22% that of desktop, despite those industry standard mobile CPCs of around 50%-60% of desktop CPCs. This represents a mobile ROI of about a third of that of desktop, and while that view of ROI may not account for in-store spillover or cross-device conversions, it still indicates that mobile bids have simply been too high.
The necessity to break out separate mobile-targeted campaigns and the thinning of keyword level data that accompanied this approach provided a hurdle to properly bidding mobile, even to larger programs, and data inferences taken from larger groupings of keywords and from other devices don't appear to have effectively impacted mobile bids.
By tying mobile, tablet and desktop data to a single keyword, bidding accurately, and at scale, has become easier, and we anticipate similar decreases in CPCs from other advertisers as they begin to close the gap in ROI between mobile and desktop.
Small Advertisers at a Loss?
For small advertisers bidding these modifiers by hand, it may still be difficult to effectively manage ad group level adjustments. Smart Pricing for mobile on Google used to help advertisers who were opted into all three device classes by automatically decreasing mobile CPCs to reflect poorer performance on smartphones.
As this mechanism becomes a thing of the past, however, these advertisers may find themselves bidding too much for mobile if they fail to adjust their mobile modifiers accordingly. There is also a chance that these advertisers will simply block mobile by using a -100% bid modifier.
While the move to Enhanced Campaigns has been a headache for many in the industry, advertisers who can properly leverage mobile bidding modifiers will be able to bid more effectively on mobile in the years to come. Though it's only been a few weeks since the mandatory transition, RKG's Adaptive Portfolio Bidding® tool is already tapping into this potential.
Another consideration is how this is affecting Google's revenue stream. While traffic has been up significantly for this advertiser, the decrease in CPCs has actually resulted in about 25% lower weekly mobile spending. If other advertisers similarly choose to utilize mobile modifiers to strengthen mobile ROI, the move to Enhanced Campaigns may end up costing Google a fair amount of revenue. Investors, I'm sure, will be anxious to see how this plays out.
What are you seeing?