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RKG Digital Marketing Report: Q1 2012 Released

Google Search Lead Strengthens Even as CPCs Continue Decline

Google paid search spend grew 35% in Q1 2012 as it once again benefited from strong click-through rate growth driven by newer ad formats and a cumulative string of design changes that have favored their paid listings.  This is according to the RKG Digital Marketing Report for Q1, 2012, which we publish each quarter to help marketers benchmark their performance and understand the latest trends in online marketing.

RKG found that while Google controls 76% of organic search visits, it supplies 84% of paid search clicks and commands 85% of paid search ad spend.  In the quickly growing mobile space, Google, with its Android operating system and status as the default search provider for Apple’s iOS, enjoys an even larger 91% share of ad clicks.

With mobile ad clicks offering 30-40% less value to advertisers across smartphones and tablets combined, a year over year doubling of mobile’s share of traffic to 13% has put downward pressure on Google’s average cost-per-click.

Also bringing down CPCs, Google continues to shift more traffic to its Product Listing Ads format, which employs richer information about products including images and prices.  In the first quarter, PLAs accounted for 11% of Google clicks, a 256% increase year over year, but PLAs are costing advertisers 10-20% less per click than an equivalent text ad.

Overall, Google CPCs were down 9% in Q1, which would mark a continued deceleration from the 8% decline Google officially reported for Q4 2011.

The latest RKG report also spotlights the performance of Bing and Yahoo in paid search and offers additional insights into data covering: search engine optimization, social media, comparison shopping engines, multi-channel attribution and more.

Among the most notable results, RKG found:

  • Total paid search spend grew at a 30% year over year rate in Q1 2012, a slight decline from Q4 growth of 31%.  Ad clicks grew at a 36% rate, a slight increase from Q4.
  • Bing and Yahoo paid search spend grew 7% overall, but ad clicks declined 4%.  Volume from non-brand terms looked particularly weak, but traffic quality, in terms of revenue per click for advertisers, has risen sharply.
  • Google’s share of organic search traffic increased to 76%, while Bing and Yahoo had shares of 10.4% and 10.8% respectively.
  • Facebook provided 5.2% of referral visits in Q1, while Twitter stood at 0.4%.  The buzz-heavy Pinterest sent even more traffic than Twitter on average, with a referral share of 0.5%.  In terms of all site visits though, the three social sites combined for less than 1% of tracked visits.
  • Mobile comprised 12% of organic search visits in Q1 and 13% of paid search clicks.  Google holds a 91% share of mobile paid search clicks.
  • Tablet share of PPC nearly quadrupled from year to year as the iPad alone accounts for nearly 7% of all clicks.  The Kindle Fire now holds 4% of tablet click share to the iPad’s 88%.
  • Advertisers on comparison shopping engines shifted traffic away from paid listings such as NexTag, which saw its share of CSE clicks decline from 14% in Q4 to 9% in Q1.  Google’s free Product Search listings generated nearly half of all CSE clicks in Q1, while Amazon Product Ads was the top paid CSE, taking 36% of all CSE spend.

While marketers and financial analysts await the official earnings releases from Google, Yahoo! and Microsoft, they can get an early read on all of the details in the full RKG Q1 2012 report.

  • Mark Ballard
    Mark Ballard is Director of Research at RKG.
  • Comments
    7 Responses to “RKG Digital Marketing Report: Q1 2012 Released”
    1. Wow, Mark, so you’re seeing Google’s Q1 spend up 35% Y/Y despite a 9% Y/Y decline in CPC’s? Given consensus expectations for G’s revenue growth are much, much lower (~25% Y/Y), I gotta think your data’s skewed upward for lack of European spend (which is weaker due to the worsening economic situation there), and for retail focus (which has positive Q4 trailing effect).

      I’d love to know if you have any data on the organic:paid ratio of mobile/tablet search traffic. While it’s abundantly clear that mobile & tablet search volume & clicks are going through the roof, I’ve so far only seen one data anecdote on the changing ratio of organic & paid clicks on mobile & tablet. You guys must have that at your fingertips; given how mobile/tablet is THE big change in search volume & CPCs, knowing how that ratio is trending seems to be the $60B question. Thoughts?

    2. Mark Ballard Mark Ballard says:

      Hi Chris,
      After a couple of quarters in a row where our numbers tracked closely with Google’s, we saw a significant divergence in Q4 and I do believe the relative strength of the retail sector was a significant factor then and with this quarter’s report. Our sample is primarily of U.S. spend, but in Q4, Google’s revenue growth for international was actually a good deal better than for the U.S, (28% v 23%) and I don’t know if that picture has changed dramatically.

      In the report itself, I also called out the notion that RKG might just be doing a better job taking advantage of the newer ad formats like PLAs that have had tremendous growth in the past year. If we take PLAs out of our numbers, they start to look a lot more like the official numbers. Also, I think any agency/vendor that reports on long-term performance will have their results biased by the fact that clients that do the best are the most likely to stay around and make the data sample.

      Re: mobile, we present figures for both organic and paid in this report, but not in a direct comparison. I’d have to look into in more detail, but at least for the last two quarters the traffic shares seem to be trending very similarly.

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