August 4, 2014, 11:35 AM

Searching for profit in mobile search

Striving for greater ROI from mobile paid search, e-retailers match content to the buying cycle and make improvements to their mobile sites.

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The mobile web is sprouting sales for Fast-Growing-Trees.com. In fact, it is the e-retailer’s fastest-growing sales channel, though not its biggest, says marketing manager Justin French.

To nurture that growth, the e-retailer of trees, shrubs and hedges over the last year tripled its spending on mobile paid search ads. He estimates the e-retailer now spends about 30% of its total paid search budget on mobile ads.

French says one reason for boosting its mobile ad spend is that the ads reach consumers at a prime tree-shopping moment. “If a potential customer sees a tree or plant in a park that she thinks she might want to have in her yard, she can just pull out her phone to look up what it might be and where to get it,” he says.

Fast-Growing-Trees.com’s competitors aren’t yet actively targeting mobile consumers with paid search, French says, and so getting in early is helping the business get ahead without spending a lot.

“Since the costs per click are so low, we tend to push harder in the mobile space, knowing our competition is not there,” he says. He says the merchant’s average cost per click for an ad served to smartphone shoppers is 31 cents versus 35 cents for a desktop paid search ad.

Like French, many retail marketers are finding that ads served to smartphone users at the right time and with the right message can make a big difference in sales. They are not only spending more on mobile paid search, they are also making sure that when a mobile shopper clicks on an ad she arrives on a page that makes it easy for her to view a product—and buy.

That shift to mobile advertising is documented in the Interactive Advertising Bureau’s annual Internet Advertising Revenue Report. Spending on ads served to consumers using mobile devices has grown at a compound annual growth rate of 123% from 2010 to 2013, compared to a 12% growth rate for non-mobile digital ads. U.S. marketers spent nearly $7.3 billion on mobile marketing in 2013; that’s roughly 17% of all digital ad dollars. While not broken out specifically for mobile, the report shows that paid search ads continue to command the greatest share of digital ad dollars, accounting for 46% of all digital ad spending.

Marketers are spending money on mobile marketing because consumers today are glued to their smartphones. Smartphone users spend more time using their phones every day (2 hours and 31 minutes) than they do watching TV (2 hours and 27 minutes), according to research firm Millward Brown Digital.

Toys ‘R’ Us Inc. is one retailer that’s investing in mobile paid search as it sees growing sales coming from mobile devices. “Mobile commerce is one of our most rapidly growing channels. We are currently using mobile paid search marketing consisting of branded, non-branded and mobile product listing ads,” a spokeswoman says. Toys ‘R’ Us generated an estimated $52.9 million in web sales via mobile devices in 2013, up 90.3% from $27.8 million in 2012, according to Internet Retailer’s 2014 Mobile 500.

She says mobile paid search is proving to be a “great vehicle” for generating mobile sales. While the retail chain advertises a broad range of products and price points to mobile shoppers, she says ads for lower-priced products convert better than those advertising more expensive purchases. Toys ‘R’ Us may also advertise the product price in a paid search ad for a low-priced item to help draw a quickly converting customer, but wouldn’t do that for a high-consideration item where a consumer is more likely researching a product, she says.

“Items with higher price points, such as swing sets or cribs, may be more likely to be purchased in stores, but are targeted via our mobile search marketing efforts to capture consumers researching these types of products on their mobile devices,” she says.

One product consumers tend to research extensively before buying is automobiles, and research from auto classifieds site Cars.com demonstrates the power of mobile paid search in that process. Its research finds that 81% of auto shoppers use smartphones to research vehicles they are considering, and 63% of these shoppers do that research while standing in a dealer’s showroom.

The key, though, is the action those consumers took. “We found that about 30% of users went to another dealership based on seeing advertisements for that nearby dealership, and a quarter of users left because they read better reviews about the other dealer or vehicle after seeing the ad,” says Allison Wessel, mobile product manager for Cars.com. She adds that mobile paid search ads that include reviews or the word “free” get more clicks than other ad content.

Recognizing that consumers increasingly search on smartphones and then use their phones to call retailers, restaurants and other providers, Google Inc. has added a feature to its paid search ad campaigns that allows the shopper to click on a search ad to call the advertiser. And retailers are getting some experience with that feature, with mixed results. French says Fast-Growing-Trees tried it, but abandoned the feature about a year ago after it got more customer service inquiries coming through the number than sales leads. Consumers do seem to use the feature. A survey Google released earlier this year indicated that 42% of mobile searchers had used the click-to-call feature, mainly because they wanted to speak to a human being.

That illustrates a key aspect of mobile search advertising: It’s not enough to create a compelling ad, retailers also have to provide the shopper with the information he needs. Just as important as getting the tap is making sure that the tap delivers consumers to a site that provides them the information they seek, says Nan Nayak, managing director of customer experience and social at digital marketing consultancy Accenture Interactive.

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