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Product Ads Help Google Spend Growth Remain Steady

Leading search and digital marketing agency, RKG, today released its Digital Marketing Report for the fourth quarter of 2013 (rkg.co/dmrq42013) – showing digital trends for paid search, SEO, social media, product listing ads (PLAs), display advertising, comparison shopping engine management, mobile and a special section on holiday performance. Across its client base, which includes over 40 of the IR Top 500 retailers, RKG found that search spending growth on Google increased slightly to 19% year-over-year. This growth was driven primarily by traffic increases as average cost-per-click (CPC) was up just 3% year over year in Q4.

Google PLAs played a key role in holiday performance, accounting for 23% of all Google traffic and 42% of competitive Google traffic, which excludes clicks on keywords that include a site's own brand name. By comparison, the newly minted Bing Product Ads format, which launched in Q3 as a closed beta, accounted for 7% of Bing competitive ad spend. Based on PLA success on Google, that figure is likely to rise quickly.

Compared to another similar ad format in Amazon Product Ads, Google PLAs sales volume was nine times larger among advertisers running on both platforms.

On the whole, PLA spend increased 72% year-over-year as Q4 CPC for the format surpassed those of competitive text ads for the first time, coming in 13% higher. Competition in the PLA space will likely continue to drive up CPCs as return on investment for PLAs outpaced comparable Google text ads by 18%.

Continued Growth of Mobile

The volume of smartphone and tablet searches continued to grow through the holidays, and traffic on these devices accounted for over 25% of paid search spend in Q4. Thanksgiving and Christmas Day were the largest mobile days by share of traffic in Q4 at 43% and 45% respectively, as those traveling during these holidays were probably more likely to pack only mobile devices. Eagerness for Black Friday deals may have also played a role on Thanksgiving, while searches on new mobile devices likely contributed to the increase in mobile share on Christmas.

While Q4 smartphone click traffic more than doubled year-over-year, CPC was down 8% – continuing the trend from Q3 due to the transition to the Enhanced Campaign model. Enhanced Campaigns' mobile modifiers gave advertisers greater control to hit more demanding efficiency goals on mobile devices, which have historically returned much lower revenue-per-click than desktop and tablet computers.

Mobile now accounts for a greater share of PLA traffic than Google text ad traffic, indicating that advertisers and consumers are already largely taking advantage of the product ad format on mobile devices.

The full RKG Digital Marketing Report offers over 40 charts with additional insights and analysis on paid search, search engine optimization (SEO), social media, comparison shopping engines, attribution and more.

Some highlights from the fourth quarter findings include:

  • Google paid search spending grew 19% Y/Y in Q4. Traffic growth drove those gains with paid clicks up 15% and CPCs up just 3%. Google Ad Rank changes in early Q4 may have suppressed Y/Y CPC growth.
  • Spending on Bing Ads, which includes Yahoo, grew 43% Y/Y in Q4. The platform continues to better monetize its traffic through more expansive ad matching logic. Bing’s new Product Ads format showed potential in Q4, generating 7% of non-brand ad spend for participating retailers.
  • Retailers running both Google Product Listing Ads and text ads generated 23% of their overall traffic from the PLA format, but an impressive 42% of their non-brand traffic. The average retailer found PLA CPCs outpacing non-brand text CPCs for the first time in Q4.
  • Smartphones and tablets generated a combined 32% of paid search clicks and accounted for 25% of paid search ad spend. Smartphone CPCs remained 60% lower than desktop and tablet CPCs.
  • Not Provided query share has plateaued at an average of 84% of Google search visits. Query data that remains available to site owners is skewed towards Android devices and desktop Safari users.
  • Following the release of iOS 7, site owners are no longer seeing Google organic searches being misattributed as direct site visits due to iOS not passing referrer information. In Q2 2013, 16% of Google searches were incorrectly classified by web analytics packages due to this issue.
  • For social media sites, 31% of referral traffic produced occurred on mobile devices. Compared to organic search, social media users showed a relative preference for smartphones over tablets.
  • Facebook generated 57% of social media referrals in Q4 2013, up from 55% a year earlier. Pinterest generated 14% of social media referrals, up from 9%.
  • Amazon Products Ads’ share of total CSE spending increased to 26% in Q4 2013, up from 18% a year earlier. Nextag has seen its share fall precipitously in the past year.
  • Among advertisers running both Amazon Product Ads and Google PLAs, RKG finds PLA CPCs running 22% higher than Amazon’s. For those same advertisers, Amazon Product Ads volume is 11% that of PLAs.

To download the full report, visit: rkg.co/dmrq42013

About RKG

RKG is a search and digital marketing agency that combines superior marketing talent with leading-edge technology to create the industry’s most effective data-driven digital marketing solutions. RKG drives business to clients by maximizing a full range of opportunities including paid search, SEO, product listing ads, social media, display advertising and comparison shopping engine management services. Founded in 2003, RKG partners with clients such as CareerBuilder, Drugstore.com, Express, Herman Miller, Jones Group and Urban Outfitters. In 2013, Advertising Age ranked RKG the fastest growing search agency. A privately held company, RKG is headquartered in Charlottesville, VA with offices in San Francisco, CA, Bend, OR and Boston, MA. For more information visit www.rimmkaufman.com or follow the company on Twitter @rimmkaufman.

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