Q32013

Benchmarking & Industry Developments

Paid SearchMobile SearchProduct Listing Ads (PLAs)Social & DisplayOrganic Search

@Performics

2

Q3 2013 Overview

MOBILE SEARCH

Benchmarks: Spend, Impressions, Clicks,

CTRs, CPC

Google Enhanced Campaigns

PRODUCT LISTING ADS

Benchmarks: Spend, Clicks, CTRs, CPC

PAID SEARCH

Benchmarks: Spend, Clicks & CTRs, CPCs

Engine Share

Google Estimated Conversions

SOCIAL & DISPLAY

Facebook Advertiser Investment

YouTube Investment

Yahoo! Stream Ads

LinkedIn Sponsored Updates

ORGANICSEARCH

Google Secure Search

Hummingbird

Bing Redesign

Paid Search

Performics aggregate U.S. client base, all engines, same store

+11.2% Spend

+9.3% Clicks

+22.1% CTRs

+1.8% CPCs

Paid Search Growth: Overview

+17.9% Spend

+16.0% Clicks

+6.7% CTRs

+1.6% CPCs

Q3 2013 vs. Q3 2012

(Y/Y)

Q3 2013 vs. Q2 2013

(Q/Q)

Spend

11.2% increase in Y/Y paid search spend– Good acceleration from

slower Q2 Y/Y, which was due to caution around GEC migration, & budget preservation for high volume in Q3 & Q4 (back to school, holiday)

Spend accelerated each month in Q3, as advertisers got more aggressive with GEC mobile bid multipliers

Performics aggregate U.S. client base, all engines, same store

+11.2% Spend

+9.3% Clicks

+22.1% CTRs

+1.8% CPCs

+17.9% Spend

+16.0% Clicks

+6.7% CTRs

+1.6% CPCs

Q3 2013 vs. Q3 2012

(Y/Y)

Q3 2013 vs. Q2 2013

(Q/Q)

6

1. Mobile– As mobile usage soars, advertisers focus on building compelling mobile

experiences to capture traffic, enabling them invest more in mobile search– GEC tablet force-in driving increased tablet spend

2. Attribution– More tools & processes to visualize the total impact of paid search (online &

offline), enabling advertisers to more confidently invest in the channel

3. Omni-channel– Linking search to all other advertising (TV, OOH, video, display, gaming

consoles) to create a holistic participant experience

Paid Search Growth Stimulators Q3

Clicks & CTRs

Although we are seeing fewer Y/Y impressions (impressions down 10% from Q3 2012 to Q3 2013), clicks are still increasing (9.3%)– This increases CTRs (22.1%

Y/Y increase) Rising CTRs indicate that

paid search advertising is becoming more effective, which is also stimulating spend

Performics aggregate U.S. client base, all engines, same store

+11.2% Spend

+9.3% Clicks

+22.1% CTRs

+1.8% CPCs

+17.9% Spend

+16.0% Clicks

+6.7% CTRs

+1.6% CPCs

Q3 2013 vs. Q3 2012

(Y/Y)

Q3 2013 vs. Q2 2013

(Q/Q)

CPCs

We’ve now seen 4 consecutive quarters of CPCs rising Y/Y– Conservative bid multipliers

at the start of GEC (July, Aug.), pulling down CPCs

– In Sept., Y/Y CPCs accelerated :– Advertisers got more

aggressive in GEC– Sept. was very

competitive for back to school

Performics aggregate U.S. client base, all engines, same store

+11.2% Spend

+9.3% Clicks

+22.1% CTRs

+1.8% CPCs

+17.9% Spend

+16.0% Clicks

+6.7% CTRs

+1.6% CPCs

Q3 2013 vs. Q3 2012

(Y/Y)

Q3 2013 vs. Q2 2013

(Q/Q)

Bing/Yahoo! spend share has grown from 20% in Q3 2012 to 23% in Q3 2013:

Increased spend driven by decreasing CPCs (improved ROI):

Bing/Yahoo! Gains on Google

Performics aggregate U.S. client base, all engines, same store

Decreasing CPCs driven by ad

enhancements & better processes to

boost relevancy (thus quality score)

10

Measures clicks on paid search ads on one device that end in conversions on other devices (or other web browsers)

More holistic view of conversions enables us to:– Find incremental conversions; reduce the amount of lost attribution across

devices & browsers– Better visualize the impact of mobile on conversion (e.g. know when

someone clicks on an ad on mobile, but later converts on desktop) to more confidently dedicate budget to mobile

We found 25% more conversions for one retailer

Google Launches “Estimated Total Conversions”

Performics Estimated Total Conversions

POV

Mobile Search

Mobile Spend Share Peaks in Enhanced Campaigns

Performics aggregate U.S. client base, Google only (content and search partners excluded), Sept. 2013

Mobile spend share of total paid search rose significantly in Q3 due to tablet and mobile force-in in Enhanced Campaigns (GEC)

Pre-GEC (June) v. post-GEC (Sept):– Total mobile spend share rose from 22.5% in June to 27.1% in Sept.– Tablet share rose from 13.4% in June to 17.2% in Sept.– Smartphone (mobile) share rose from 9.0% in June to 9.9% in Sept.

72.9% Desktop

17.2% Tablets

9.9% Smartphones

Spend Share by

Device (Sept.)

Y/Y increases in mobile spend: Total mobile: 59.1% Smartphone: 58.6% Tablets: 59.4% GEC Migration

GEC tablet force-in led to an 88% increase in tablet impressions from June (pre-GEC) to Sept. (post-GEC)– Smartphone (mobile) impressions increased 44% over same period

Tablet Impressions Accelerate in Q3 Due to GEC

Performics aggregate U.S. client base, Google only (content and search partners excluded), Sept. 2013

9/1/2

012

10/1/2

012

11/1/2

012

12/1/2

012

1/1/2

013

2/1/2

013

3/1/2

013

4/1/2

013

5/1/2

013

6/1/2

013

7/1/2

013

8/1/2

013

9/1/2

0130

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

Mobile Impressions

Mobile Tablets

GEC Migration

Mobile (tablets + smartphones) was 37.7% of all paid search clicks in Sept., the second highest ever after Aug. (39.8%)

Mobile Click Share Also Reaches New Heights

Performics aggregate U.S. client base, Google only (content and search partners excluded), Sept. 2013

YoY increases in mobile clicks: Total mobile: 37.2% Smartphone: 34.4% Tablets: 40.2%

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

31.1%28.5%

32.3% 33.7% 32.4%34.7% 34.8% 34.3% 35.3% 36.4% 37.7%

39.8% 37.7%

Mobile Clicks

Mobile Tablets % Clicks from M + T

GEC Migration

Historically, tablets had the highest CTRs, followed by smartphones (mobile) and desktop

But, in GEC, increased tablet competition has led to lower tablet CTRs– Now smartphones enjoy the highest CTRs, followed by tablets and desktop:

Tablet Click-Through Rates (CTRs) Drop in GEC

Performics aggregate U.S. client base, Google only (content and search partners excluded), Sept. 2013

GEC Migration

After GEC Migration Drop, Mobile CPCs Bounce Back in September Uncertainty at GEC migrations in July

caused advertisers to be conservative with mobile bid multipliers, leading to smaller short-term mobile CPCs increases than expected

Mobile CPCs then stabilized in Sept. as advertisers became more comfortable with GEC and got more aggressive with bid multipliers

Mobile CPCs were 42% of desktop in June, falling in GEC to 39% in July and 37% in Aug., and then bouncing back up to 45% in Sept.

Performics aggregate U.S. client base, Google only (content and search partners excluded), Sept. 2013

3/1/2013 4/1/2013 5/1/2013 6/1/2013 7/1/2013 8/1/2013 9/1/20130%5%

10%15%20%25%30%35%40%45%50%

Mobile CPCs (Indexed against Desktop)

Mobile CPC Index

Product Listing Ads (Google Shopping)

18

PLA spend has risen from 1.4% of text ad spend in Q3 ‘12 to 4.6% of text ad spend in Q3 ’13

We expect PLA spend and click share to peak during holiday

PLA Spend Share Grows in Q3

19

Although PLAs are becoming richer and more visible, searchers still click at a similar rate to desktop:

PLA Click-Through Rates (CTRs) Mirror Text Ads

20

PLA CPCs have remained slightly above regular text ad CPCs in Q3

We expect PLA CPCs to rise in Q4 due to holiday competition

PLA CPCs Remain Slightly Above Text Ads

Social & Display

22

Advertiser interest is rising as Facebook has become more direct-response focused through the addition of:– Better Tracking: view-through, conversion pixels– Facebook Ad Exchange (FBX): Advertisers can now better target (e.g. by browsing

history). A user’s recent browsing data is more likely to indicate intent to purchase than Facebook’s other targeting options (e.g. profile demographics or interests).

– Ads that direct traffic off-site

Facebook Advertiser Investment

23

Continuous news stream where Stream Ads appears between every 10–15 articles on Yahoo! Home, News, Travel & Finance

CPC-based; target based on DMA, city, state, gender

Stream Mail runs on top of inbox

We’re seeing higher ROI than other contextual ad types

Yahoo! Stream Ads

24

Ad (content) appears in news feed

Focus on relevant, helpful content

Content is not one-size fits all; it requires deep understanding of the users’ wants, needs & barriers

Leverage LinkedIn’s unique targeting capabilities (e.g. job titles, specific companies)

LinkedIn Sponsored Updates

Organic Search

26

Google has been encrypting organic searches (keyword: “not provided”) for logged-in users, but will now encrypt organic searches conducted even when users aren't logged in– e.g. advertisers cannot see what organic keyword drove the click to their

sites

Keyword information will still be passed from paid search ads

Update makes keyword data from paid search more valuable to inform organic search optimization, increasing the incentive for advertisers to take a OneSearch (paid + organic) approach

Google to Encrypt All Organic Searchers

Performics Google Secure Organic Search

POV

27

Google made an algorithm update (“Hummingbird”) that affects 90%+ of search results

Unlike Panda and Penguin, Hummingbird focuses less on the ranking algorithm and more on how queries are understood (conversational search)

So far the update hasn’t had much impact

Future keywords & content should focus more on longer queries and providing searchers with answers

Google Hummingbird Algorithm Takes Flight

Performics Google Hummingbird

POV

28

New logo, design & palette

Bing is also “stepping out of the search box” by integrating further into Win. 8, Windows Phone, Xbox, Maps, Word & Excel– Searchers now discover products & services well beyond the traditional

search page– Search strategies must now extend everywhere to engage participants

(xBox, Siri, Internet-connected TVs, GPS units, operating systems, apps, etc.)

New Bing Identity Highlights Evolution of Search

Performics Bing Redesign

POV

29

– Brands should claim listings & pages on sites that Snapshot pulls content from (e.g. Citysearch)

– Ensure all info is accurate– Build fan bases, create

content, encourage participation to showin Sidebar

Bing Enhances Sidebar & Snapshot

Sidebar (social)

Snapshot (facts)

30

Shows organic results as the searcher types

Not impacting paid search keywords

Shows on fact-based queries (places, people, things)

Bing Rolls Out Page Zero Results

31

Bing-controlled listing pushes down traditional organic listings

Shows on queries where Bing is confident in user intent:

Bing Launches Pole Positions

BLOG.PERFORMICS.COMSLIDESHARE: PERFORMICS_US@Performics

Benchmarking & Industry Developments Q3 2013