11/11/13

Advertisers pay more for paid search ads on smartphones

The cost per click on a tablet ad remains below that of a desktop ad.

Amy Dusto , Associate Editor

As mobile devices account for an increasing share of U.S. Internet traffic, the cost of paid search advertising on smartphones and tablets is gaining on that of desktops, historically the most expensive format, according to a new report from digital marketing software provider Marin Software Inc.

The average cost per click for a smartphone ad on Google Inc.’s search engine over the nine weeks from July 22 to Sept. 23 crept up to 74% of the cost per click on desktop, compared with 61% of that cost in the same period last year, the report says. Meanwhile, the cost of a click on a tablet ad on Google slipped to 87% versus 90% of a desktop ad click in 2012, Marin says.

The vendor did not provide absolute spending amounts. The data come from Marin clients in the United States in multiple industries, with retail representing the majority.  Collectively those companies spend more than $5 billion annually on paid search spending.

“The bidding landscape is becoming more aggressive, more saturated with advertisers,” says Kye Mou, a Marin product manager and author of the report. “In the past, mobile has been sort of a ‘gimme’ for advertisers—it wasn’t as competitive, expensive or complex as it is today.”

Additionally, the click-through rate of ads on tablets has begun to converge with that on desktops, suggesting that consumers increasingly use computers and tablets in the same way, he says. In the nine-week period this summer covered by this study, the click-through rate on tablets was 27% higher than on desktops, down from 51% higher in the same period last year, the report says. Meanwhile smartphones branched off in the other direction, with click-through rates this summer reaching 88% higher than desktop rates, up from 82% higher last year. Overall, while click-through rates on tablets move closer to those on desktops, smartphone click-through rates are increasing compared to desktops.

“What you do on a tablet device is slowly mirroring what you do on a desktop,” Mou says. “Not only do we have two devices slowly becoming one, but we have one device slowly pulling away from the pack—the smartphone.”

Accordingly, paid search ad spending for smartphones is going up.

“Advertisers nearly doubled their investment in mobile—they wouldn't do that if they weren't seeing a return,” Mou says, though he doesn’t have exact figures on the spending or return on ad spend. Consumers who click on a smartphone ad might make a purchase immediately, but they more often engage in activities that influence their decision to buy later, such as clicking to make a phone call or to obtain directions to a store, he says. Marin recommends retailers use analytics services to track the outcomes of their mobile campaigns in order to understand how much each of those actions drives revenue.

 

Topics:

m-commerce, marin software inc., Mobile, mobile commerce, mobile statistics, paid search advertising, smartphone, web advertising

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