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Paid Search Trends Iprospect QUARTERLY REPORT | 2017 Q3 Paid Search Trends iPROSPECT QUARTERLY REPORT | 2017 Q3 By Jessica Freistat, Director, Paid Search and Michael Kelley, Director, Data & Insights iProspect.com COPYRIGHT 2017 © iPROSPECT, INC. ALL RIGHTS RESERVED. iProspect Quarterly Report Paid Search Trends | 2017 Q3 2 Introduction In a surprising trend, Q3 2017 recorded a quarter over quarter (QoQ) decline in CPC. This marks a departure from the consistent QoQ CPC increases recorded between Q2 2016 and Q2 2017. Primary factors that contributed to this Q3 decrease include: Mobile: Advertisers continued to allocate a greater percentage of their budgets to mobile, which has a lower CPC than desktop on Google. Google’s May 2017 Ad Rank update: An analysis across iProspect’s clients on the impact of this update showed a 4% decrease in CPC for non-trademark terms. CTR Increases: Search CTR increases have been noted across some advertisers as a result of ongoing testing and refinement of expanded text ads as well as ongoing audience targeting adoption and testing, which positively influence ad relevance, CTR, and Quality Score. In Q4, CPC is likely to increase during the November/December holiday season as ad- vertisers who are capitalizing on the peak holiday shopping season drive an increase in competition. While iProspect’s Q2 Google AdWords data showed continued increases in CPC, Q3 2017 saw a QoQ decline in CPC, indicating a shift in cost trending. Year over year (YoY) CPC increases contributed to click declines as advertisers are spending more per click thus receiving fewer clicks within their budget, but QoQ CPC decreases in Q3 mean that costs haven’t continued to increase for advertisers this past quarter. © 2017 IPROSPECT. ALL RIGHTS RESERVED. iProspect Quarterly Report Paid Search Trends | 2017 Q3 3 Shopping investment and volume continue to grow in Q3 2017, once again reaching their highest levels to date. Data showed significant year over year (YoY) declines in Shopping CTR due to an increased number of impressions served, which was attrib- utable to several changes in Shopping ad formats on Google. Despite the lower CTR, Google Shopping Click Share across iProspect’s advertiser set increased 48% QoQ. Shopping investment and volume continue to grow in Q3 2017, once again reaching their highest levels to date. For the first time since this report’s inception in 2014, iProspect also analyzed Bing Ads data across iProspect’s advertiser set. Investment in Bing has been growing steadily since Q3 2016 and continues to grow, up 22% YoY in Q3 2017. The following trends and insights are based on an analysis of data from more than 2,500 Google AdWords and Bing Ads accounts. All of these accounts are managed by iProspect U.S. (though the spend is not confined to U.S. markets), and together they represent more than 220,000 active campaigns, spanning both Search and Shopping ad formats. © 2017 IPROSPECT. ALL RIGHTS RESERVED. iProspect Quarterly Report Paid Search Trends | 2017 Q3 4 Reviewing Overarching Q3 2017 Trends—A Look at Primary KPIs GOOGLE: CPC DECREASING. SHOPPING GROWING In a surprising deviation from its typical trend, Google’s QoQ CPC dropped. This decrease contrasts sharply with across-the-board YoY CPC increases: 27% overall for Google, 31% for Search, and 15% for Shopping. CPC was also up YoY across all devices: desktop up 28%, mobile up 32%, and tablet up 22% YoY. In Q2, iProspect recorded the highest CPC levels to date, but this trend changed in Q3 with a QoQ CPC decline of 5%. The overall CPC decline was due to declining Search CPC, specifically—7% QoQ—whereas Shopping CPC saw a 5% increase QoQ. In terms of devices, CPC declined QoQ across both desktop (-3%) and mobile (-7%), potentially influenced by Google’s May 2017Ad Rank update. Tablet CPC increased 7% QoQ. © 2017 IPROSPECT. ALL RIGHTS RESERVED. iProspect Quarterly Report Paid Search Trends | 2017 Q3 5 Despite consistent spend levels across the advertiser set, iProspect recorded YoY Google CPC Google impression and click declines of 9% and 23%, respectively in Q3 2017. As noted in Q2, significant YoY upward trends in CPC heavily influenced a corresponding hit all-time peak reduction in clicks as advertisers were forced to pay more per click. The end result: in Q2 2017, but advertisers were driving less traffic for each dollar spent. declined 5% Shopping CTR declined 21% YoY due to YoY increases in the number of Shopping ad quarter over units displaying on the search engine results page (SERP). By contrast, CTR across Search campaigns was up 28% YoY. Desktop Search campaigns saw the highest CTR quarter in Q3. increase at 48% YoY, followed by Tablet (+23%) and Mobile (+5%). © 2017 IPROSPECT. ALL RIGHTS RESERVED. iProspect Quarterly Report Paid Search Trends | 2017 Q3 6 BING: INVESTMENT UP 22% YEAR OVER YEAR Across iProspect clients, Bing investment grew an impressive 22% YoY, with Search investment up 21% and Shopping investment up 37%. Impressions and clicks, however, were down 6% and 13%, respectively due to a 40% YoY increase in CPC. This CPC increase was most notable across Search campaigns, which were up 43% YoY while Shopping campaigns increased only 7% YoY. iProspect speculates this increase may have been influenced by an increase in competition as advertisers increased in- vestment on Bing. © 2017 IPROSPECT. ALL RIGHTS RESERVED. iProspect Quarterly Report Paid Search Trends | 2017 Q3 7 CTR increased 7% YoY across Bing Search campaigns while the search engine saw Shopping campaign CTR decrease substantially by 52% YoY. This drop was influenced by greater numbers of advertisers adopting Bing Shopping as a standard component of their overall Search programs. © 2017 IPROSPECT. ALL RIGHTS RESERVED. iProspect Quarterly Report Paid Search Trends | 2017 Q3 8 iProspect expects to see an increase in overall Bing Shopping traffic in Q4 2017 because of typical holiday season activity and also because of Bing’s recent release of the Shopping Tab. © 2017 IPROSPECT. ALL RIGHTS RESERVED. iProspect Quarterly Report Paid Search Trends | 2017 Q3 9 Taking a Closer Look— Areas of Special Interest MOBILE: MOBILE CLICK MAJORITY ON GOOGLE, DESKTOP CLICK MAJORITY ON BING Mobile CPC declined 7% QoQ in Q3 2017 after having hit an all-time high in Q2 2017. Because advertisers aggressively increased their YoY mobile investment to align with user trends, mobile CPC increased a substantial 32% YoY, but the corresponding in- crease in SERP competition is now beginning to level off so we are unlikely to see equally rapid CPC increases moving forward. Compared to last quarter, the percent- age of overall clicks coming from mobile click share on Google rose slightly in Q3 to 61.9% QoQ (vs. 60% in Q2 2017). Desktop and tablet click share were both down at 30.6% and 7.5%, respectively. Looking at YoY numbers, mobile click share increased 17% (up from 53% in Q3 2016), while YoY desktop and tablet click share both declined, by 15% and 32% respectively. © 2017 IPROSPECT. ALL RIGHTS RESERVED. iProspect Quarterly Report Paid Search Trends | 2017 Q3 10 On Bing, mobile CPC increased only slightly YoY (up 2%) in Q3 2017, but was 18% higher than Bing desktop CPC in Q3. This differs from Google, where CPC remains 28% lower for mobile than desktop. The percentage of overall mobile clicks on Bing was 24% in Q3, much lower than on Google (61.9%). On Bing, desktop still holds the clear majority of clicks at 68%. Q3 tablet clicks were up slightly YoY at 8%. Mobile click share on Bing increased to 24%, up from 17% in Q3 2016. iProspect speculates that default search engines on mobile devices contributed to lower mobile search volume on Bing, and overall mobile search query volume has grown more rapidly on Google vs. Bing. © 2017 IPROSPECT. ALL RIGHTS RESERVED. iProspect Quarterly Report Paid Search Trends | 2017 Q3 11 SHOPPING: GOOGLE SHOPPING INVESTMENT REACHES HIGHEST LEVELS ON RECORD Google Shopping Growth Continues Google Shopping investment and clicks both continue to rise, and both were the highest they’ve ever been in Q3 2017. Impressions increased 79% YoY and clicks in- creased 42% YoY. Google Shopping CPC increased 15% YoY, and further increases are expected in Q4 2017 due to increased investment and competition during the holiday season. Google Shopping CPC remains lower than Search CPC and was 17% lower than Google Search CPC in Q3 2017. Comparatively, Google Shopping CPC was 27% lower than Search ads in Q2 2017. Q3 Google Shopping volume continued to grow at a faster rate on mobile than any other device, with mobile impressions increasing 93% YoY and clicks increasing 54% YoY. Comparatively, desktop clicks increased 30% and tablet clicks decreased 2% YoY. © 2017 IPROSPECT. ALL RIGHTS RESERVED. iProspect Quarterly Report Paid Search Trends | 2017 Q3 12 Google Shopping CTR Decreases Overall CTR for Google Shopping decreased 21% YoY, which was a primary driver of the aggregate CTR decrease noted in the overarching trends for the quarter. As was the case in Q2, this CTR decrease was primarily due to an increase in the number of ad units Google shows on the SERP per query, i.e. the number of impressions recorded for each advertiser. These changes were the result of several SERP updates, including: Expansion of the mobile Shopping carousel from 17 to a maximum of 30 offers per query An increase in the number of Shopping ad units on the Desktop SERP Addition of a new carousel format on YouTube Addition of Shopping ads on Image search Addition of Showcase Shopping ads and Shop the Look ads, which show for broader queries and allow Google to monetize higher-funnel searches while offering advertisers the ability to capture more visibility with an attractive Shopping ad unit In an effort to understand how these SERP updates impacted Shopping CTR, a careful examination of the effects of the mobile shopping carousel update uncov- ered several specific insights.
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