May 1, 2013, 4:24 PM

U.S. advertisers spend more on paid search ads

In the United Kingdom, meanwhile, paid search spending is down.

Katie Evans

Managing Editor, International Research

Lead Photo

U.S. paid search budgets up are up, E.U. (minus the U.K.) budgets are flat, and U.K. budgets are down, according to recent research from digital marketing technology company Kenshoo Ltd.

In the United States and United Kingdom, first quarter ad spending was predictably down from the busy fourth quarter holiday shopping season, Kenshoo says. However, whereas U.S. Q1 paid search spending grew 24% year over year, U.K. ad spending in the U.K. dropped 11% compared to the same quarter in 2012. In the European Union, Q1 budgets rose 4% compared to Q4 2012, but fell 4% year over year, Kenshoo says. Kenshoo declined to speculate about the causes of the U.K. and E.U. budget drops. On average across all those regions, paid search ad spending is up 15% year over year with clicks up 21%.

The findings come from the Kenshoo Search Advertising Trends Q1 2013 report, which is based on several billion dollars in global paid search ad spend by advertisers and agencies that have been active on the Kenshoo platform for the past two years

The report also notes that in the United Kingdom mobile devices (including both tablets and smartphones) account for nearly 25% of paid search spending and about 28% of paid search clicks. Kenshoo did not say what those figures were for Q1 2012.

Cost-per-click on paid search ads is now 47 cents for tablets in the United Kingdom, the same as that of PCs. But the average smartphone paid search cost-per-click is 31 cents, which represents an opportunity for advertisers, Kenshoo says.

While U.K. advertisers’ share of total paid search spend on computers (72.3%) and tablets (16.7%) is closely aligned with the share of clicks they generate, phones lag behind with 11.5% of total clicks yet only 7.8% of the total spend, the report says.

Because smartphone ads have a lower cost-per-click than computers and tablets, U.K. advertisers might want to consider shifting some of their paid search spending to smartphones, Kenshoo says. It adds, however, that advertisers should look at more than conversion rates stemming from such paid search ads to determine their success.

“Advertisers should be assessing the value of mobile clicks in alternative ways because you can’t expect a phone to deliver the same rate of direct online sales as devices with bigger screens that are typically used in the home,” says Aaron Goldman, chief marketing officer at Kenshoo. “It’s imperative to track and optimize conversion events like phone calls, app downloads, check-ins, web site registrations and store locators.”

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