September 27, 2012, 11:52 AM

Search spending increases nearly 18% in Q3

Per-click costs for mobile are on the rise, IgnitionOne says.

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Paid search spending increased 17.8% year over year in the third quarter, according to a new report from IgnitionOne.

The digital marketing firm provided no spending figures in dollars, but said that the Q3 spending was essentially flat compared with Q2. The company attributes the minimal quarter-over-quarter growth to a weaker-than-expected back to school season and weakness in the economy.

Per-click costs also increased 11.2% during the quarter. IgnitionOne says the cost per click for search ads on Google increased 7.7% from Q3 2011, while the cost per click for search ads on Yahoo/Bing increased 26.1%. Microsoft Corp.’s Bing search engine provides the search functionality for Yahoo Inc. sites as well as Microsoft sites. Google continued to dominate paid search spending, collecting 79% of search spending versus 21% for Yahoo/Bing.

Q3 was the first time this year that per-click costs increased, IgnitionOne says. It attributes that to the cost of mobile search ads, which have been rising. “Mobile ads [are] beginning to close the CPC gap with PCs,” the report says.  

The report went on to say that mobile paid search in Q3 accounted for 16.3% of paid search spending, up from 14% in Q2. Of the budget allotted to mobile paid search, marketers spent slightly more than half, 52.2%, on mobile paid search ads for tablet computers, down from 60% in Q2.   

Taking a deeper dive into mobile paid search data, IgnitionOne says advertising to shoppers on tablets yields results. Data show tablet users spend 30% more time on site after clicking on a mobile paid search ad and are 20% more engaged than shoppers who click on a paid search ad from a PC. The company measures engagement based its own technology that analyzes behavior and the likelihood to convert. Tablet shoppers also view more pages than PC users.

On the flip-side, smartphone users spent less time, viewed fewer pages and were less engaged than PC users. “This is likely due to the slower speed and less optimal browsing experience on a smartphone when compared to larger devices,” the report says.

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