Global consumers are increasingly conducting their Web searches on smartphones and tablets. Advertisers have gradually allocated more of their paid search budgets to target mobile.
The result is a pronounced growth in mobile’s share of clicks on those paid search ads: Over the course of 2012, that share increased from 14.2% to 23.4%, according to data from Marin Software. The report includes data from 13 major paid search markets globally, including the U.S., United Kingdom, and the Eurozone.
But the key question is how effective these ads are. The conversion rate on mobile paid search ads — in other words, the percentage of times that a click on one of those ads is converted into a sale — varies a great deal between smartphones and tablets. It also varies regionally.
In the U.S., the conversion rate was 2.8% for smartphones, and 3.3% for tablets during 2012. The rate for PCs was 3.9%. The results for the U.S., including average cost-per-click, are displayed in the chart below.
The depressed conversion rates on smartphone paid search ads may partly be a result of the fact that many do lead to sales, but offline, and these aren’t tracked.
In any case, the result is dramatically lower ad prices for smartphone search ads, $.48 cost-per-click or CPC, compared to $.62 on tablets, as shown above. That has created a flagging CPC problem for Google and other search engines.
The other explanation for why smartphone CPCs are considerably lower is that there’s a glut of mobile search ad impressions as users pour into mobile, and so excess supply has dampened prices.
Similar results were found in the UK and in Europe, although mobile conversion rates were lower than in the U.S.
Google’s recent changes to its AdWords product could impact conversions and measurement as the changes push advertisers to blur the lines between devices. But the new campaigns won’t totally roll out globally until July, and it’s too early to tell what the impact will be on the paid search ad ecosystem.
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