Michael is a seasoned online marketing professional with experience in PPC, SEO, display advertising, remarketing, paid social media and affiliate marketing. He is a self-professed data nerd and Excel junkie. He enjoys traveling to new places and beating his friends and family at board games.

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Q4 Search Engine Marketing Insights – Cost-Per-Click (CPC) Inflation and Understanding the Mobile Landscape

InsightThis Quarter in Search Engine Marketing – Cost-Per-Click (CPC) Inflation and Understanding the Mobile Landscape

Marin Software, one of the leading paid search management platforms, recently released their latest PPC benchmark report (you can download it here).  A few disclaimers/notes to keep in mind when reading the analysis below (and the report as a whole):

  • This data is from businesses with over one million dollars in PPC spend annually
  • Canada is contained with the ‘US’ section of the report

As with the Q3 Benchmark Report analysis that I conducted, I want to focus on what I believe are the most important insights from the report:

1. The State of Search is Strong, But Bid Inflation a Factor

For Q4, impressions and clicks increased 37% and 24%, respectively, year-over-year (YoY).  This increase is due in part to the continued rise in mobile search and also the improving US macroeconomic picture.  CPCs also rose by 14% for Google and 22% for Yahoo/Bing over the same quarter last year.  Again, the improving economy likely had an impact on CPCs due to more ad spend and, therefore, increased competition.

What Marketers Need to Know: The increase in impressions and clicks indicates that the search engine marketing channel remains strong.  Some industry watchers have been predicting the decline of search in favour of a shift to social media platforms – these results contradict that hypothesis.  The rise in CPCs YoY is also a strong reminder that marketers need to adjust their yearly PPC spend upwards even if they simply want to maintain results year-over-year.  Inflationary pressures in PPC make this a necessity.

2. Mobile Continues to Grow, But Marketers Need to Dig Deeper

Mobile paid search accounted for 22% of all PPC clicks in Q4, which represents yet another high-point for the channel.  Digging deeper into the numbers, smartphones accounted for 12% of total spend but only 8% of clicks which means that CPCs are indeed cheaper.  Clickthrough rates (CTR) are also much higher for smartphones, at 4.31% compared to 2.21% for traditional search.  The CPC and CTR numbers for tablets are stronger than traditional search ($0.67 and 2.85%, respectively), but not as strong as smartphones.

What Marketers Need to Know: Although the growth numbers and CPCs for mobile are exciting, marketers need to understand the complete impact on their conversion funnel.  Conversion rates on mobile sites can be much lower than their desktop cousins: one study by SEOmoz has conversion rates 50% lower on mobile than on desktops.  Furthermore, the study found that average order values are approximately 20% lower for mobile.  Both of these metrics can dramatically impact the overall ROI of your PPC program.  This is not to say that mobile should be avoided, but that a holistic measurement approach must be implemented to gauge results and success of any mobile PPC campaign.