US Online Advertising Report

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US Online Advertising Report

Key Trends & InsightsJanuary - March, 2012

2Copyright © 2012 Marin Software Inc. All rights reserved.

US Online Advertising Report - Key Trends & Insights - April 2012

Introduction

The first quarter of 2012 unveiled several important paid-search trends. On a year over year basis, advertisers increased click-through-rates (CTR), while keeping overall cost-per-click (CPC) in check. These trends point to advertisers realizing increased efficiencies from paid search, while growing their search programs.

On the subject of efficiency, we also found that a larger percentage of advertisers were using Phrase and Exact type of keyword matching, and realizing strong performance gains as a result. Lastly, our data suggests that advertiser adoption of mobile and tablet devices for paid-search advertising is accelerating and showing significantly better performance than similar campaigns on desktop computers.

Research Methodology

To uncover key trends for the first quarter of 2012, we sampled the Marin Global Search In-dex, which includes over 1500 advertisers and agencies that invest over $3.5 billion annually in paid-search. The Marin Global Search Index consists of enterprise-class marketers -- larger advertisers and agencies who spend in excess of $1 Million annually on paid-search, social and display. As such, our data sample and findings skew towards the behavior of larger organizations and more sophisticated advertisers.

We kept the study longitudinal by focusing on a representative set of US advertisers who have been active on Marin for the previous five quarters, and measuring key performance indicators (KPIs) on a year over year (YoY) and quarter of quarter (QoQ) basis. Unless otherwise mentioned, all of the analysis in this study refers to trends in the search (versus content) network. Wherever possible, we used medians and indexed values to more clearly highlight overall trends instead of absolute values. This allows us to mitigate the effects of outliers, and make the findings more representative of the performance of the typical Marin client. For Q1, we rebuilt our client index data pool as part of an annual data refresh. This could result in slight variations in prior quarter data that we’ve reported previously, but will make the analysis and findings more representative as we move forward.

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Findings:

1. Growth in Click Volume and Overall Performance: On an annual basis, advertisers saw paid search click volume rise by 37% accompanied by a 21% increase in impression volumes. Im-provements in click volume can be largely attributed to stronger CTR and a stable to lower aver-age CPC. The combination of improving CTRs and stable to declining CPCs, point to a significant efficiency gain for Marin’s clients over the past year.

Copyright © 2012 Marin Software Inc. All rights reserved.


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2. Improved Efficiencies on Google and Spend Increases on Yahoo! and Bing: According to Comscore , 66.4% of all US-based search queries were conducted on Google during February 2012. During this same period, Yahoo! was at 13.8% and Microsoft at 15.3%. Despite having 66.4% of the overall US search volume, Google monetized its searches much more effectively -- accounting for 81% of paid search spend and 82% of all paid-clicks during the same period.

On Google, the story we saw was largely about advertisers becoming more efficient. On a year over year basis, we saw a 46% increase in clicks with impression volumes only rising 29%. Dur-ing this time, our clients saw a 14% increase in click through rates (CTR) on Google, while cost per click declined by 12%.



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On Yahoo and Bing, the story was largely about continued investment but higher CPCs. On a year over year basis, advertisers saw 13% higher click volumes, coupled with a 32% jump in CPC and a nominal increase in CTR.

The following charts outline how search performance characteristics differ across Google and Yahoo! and Bing.



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3. Match Type Optimization Creating Significant Performance Gains: Our analysis shows that gains in efficiency over the past year have been a result, in part, of advertiser efforts to refine match types. Refining match types from Broad to Phrase or Exact, increases relevance and click-through rates for keywords, thus improving quality scores and lowering costs. In the past year, search marketers have increased their use of Exact Match, growing their click-share by 4% while increasing share of ad spend by 1%. The following charts indicate year over year change in paid-search metrics by match type, and demonstrates the effectiveness of Exact Match from both a CTR and a CPC perspective.

4. Industry Specific Trends: While it’s helpful to understand the broader context of how paid search is evolving at a macro level, the reality is that different industries can demonstrate fun-damentally different trends. To that end, we looked at the behavior of seven different industries and uncovered some new and unexpected trends. This section provides insights on representa-tive values for CTR and CPC across seven verticals (Q1 2012), and industry-specific trends for key metrics.



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Paid Search Trends – Auto

Paid Search Trends – B2B


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Paid Search Trends – Education

Paid Search Trends – Finance



9Copyright © 2011 Marin Software Inc. All rights reserved.

Paid Search Trends – Healthcare

Paid Search Trends – Retail


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5. Device Targeting & Performance: While Desktops and Laptop computers still command the vast majority of search spend, we are starting to see positive trends as marketers explore new platforms to extend their reach. Device targeting, in particular, is showing promise as smart phone and tablets become increasingly popular around the world. To provide context around usage patterns and spend allocation, the charts below shows how click and spend share was segmented across our client base during March 2012.

Paid Search Trends – Travel

Click Share By Device - March 2012 Spend Share By Device - March 2012

Smartphones

Tablets

Computers84%

10%

6%

Smartphones

Tablets

Computers88%

7%

5%



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Mobile and Tablet devices accounted for 16% share of clicks and 12% share of spend during March 2012. Growth in consumer adoption has been a strong driver of click volume growth on these devices. Additionally, spend allocation on mobile and tablet devices is also growing very quickly and marketers are realizing solid performance across both mobile and tablet devices. The following chart compares click through rates and cost per click across devices during March 2012.

While device targeting may not be relevant for all advertisers, marketers should evaluate their target demographic, and where appropriate, leverage the performance and cost effectiveness of targeting ads to tablet or mobile users.

Click Through Rates - March 2012

Smartphones TabletsComputers

2.21%

5.15%

3.05%

Cost Per Click - March 2012

Smartphones TabletsComputers

$0.76

$0.53$0.60



Copyright © 2012 Marin Software, Inc. All rights reserved. 12

Conclusion

On a year over year basis, click volume increased by 37% for paid search marketers. Addition-ally, increases in click-through rates combined with a lower cost per click on Google indicate that advertisers have increased their efficiency and performance in the past year.

Google continued its search dominance by garnering 81% of US spend share and 82% of US click share while controlling 66.4% of overall US search volumes. Despite falling behind in over-all click share, Yahoo! and Bing are continuing to show growth in click volume and cost per click.

The past year has also seen advertisers improve efficiency by increasing usage of exact and phrase match keywords. Tools such as Marin greatly simplify the process of keyword expansion and automated bid calculation for large keyword sets, and enable search marketer to focus on more strategic objectives such as keyword refinement.

Lastly, we found that tablet and smart phones, while still in early stages of adoption relative to desktop computers, are showing strong and accelerating gains in search share, while delivering quality performance with higher than average Click Through Rates. As these devices become more widespread, and marketers develop smarter targeting strategies, we expect to see an ever increasing percentage of ad spend funneled towards smart phones and tablets.


Copyright © 2012 Marin Software, Inc. All rights reserved. 13

About Marin Software

Marin Software is a leading provider of online advertising management solutions, offering an integrated platform for managing search, social, display, and mobile marketing. The compa-ny provides solutions for advertisers and agencies, enabling them to improve financial perfor-mance, save time, and make better decisions. Marin Enterprise, the company’s flagship product, addresses the needs of online marketers spending at least $100,000 per month on biddable media. Marin Professional delivers the same power and ease of use as Marin Enterprise, through an application designed for marketers spending less than $100,000 per month. Headquartered in San Francisco, with offices worldwide, Marin’s technology powers marketing campaigns for over 1,500 customers managing more than $3.5 billion of annualized ad spend in more than 160 countries. For more information, visit: www.marinsoftware.com.

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US Online Advertising Report

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