Posted by Ryan Hornacek, Analyst, Strategy & Analytics
August is the peak of back-to-school shopping, and—this year—mobile search played a huge role. Our aggregate client group dedicated 25.2% of paid search budgets to mobile in August, a new record. In fact, some of our retailers invested close to 50% of paid search budget in mobile. Spend pushes led to big increases in impressions and clicks, as well as outstanding CTRs. However, increased competition around highly coveted generic back-to-school keywords caused mobile CPCs to rise for the first time in months, especially on tablets. Below, we analyze mobile search’s role in back-to-school, and we look forward to mobile holiday 2012.
In August, our aggregate client group dedicated 25.2% of total paid search spend to mobile, a new record (beating the previous record of 21.7% in June). This was largely driven by our retailer clients, who invested incremental budget to capture back-to-school demand from parents and students (1) shopping on their phones while running around town and (2) shopping on their tablets while sitting on the couch at night. Some brands with heavy back-to-school markets invested close to 50% of August paid search budgets in mobile. In terms of mobile spend volume, August 2012 bested even November 2011 (the height of 2011 holiday shopping).
Our retailers’ heavy back-to-school mobile investment resulted in larger mobile share of voice on highly competitive generic keywords; it also spurred physical-store traffic from parents and students looking for the best in-store deals. Spend across mobile devices (smartphones) and tablets was broken 50/50. This back-to-school mobile “test” (prior to holiday 2012) foreshadows a huge mobile November and December for retailers. In particular, we think advertisers will invest more in tablets come Q4. As more tablets are released (and at lower price points), more people will own tablets this holiday. Consider that 31% of people now own tablets, up from 11% in 2011 (according to the Online Publishers Association (June 2012)).
Impressions & Clicks
With increased spend came increased impressions and clicks. In August, mobile impressions were 29.2% of all impressions, a new record (beating the previous record of 25.1% in July). Tablets were 30% of mobile impressions. Additionally, mobile impression volume is now up 300+% year-over-year:
Mobile click share also achieved a new record in August—mobile clicks were 34.5% of all paid clicks for our aggregate client group (up from 31.5% in July). Mobile click volume bested December 2011, which bodes for a huge December 2012. Tablets were 36.3% of mobile clicks.
After months of steady (and even declining) mobile CPCs, August mobile CPCs finally rose. Specifically, mobile device (smartphone) CPCs rose 4% over July, and tablet CPCs rose 22.8% over July. However, smartphone CPCs are still 50.5% of desktop CPCs, and tablet CPCs are 88.3% of desktop. The August rise in mobile CPCs was due primarily to:
- Big pushes in mobile spend for our retailer clients during the August back-to-school season. Back-to-school is highly competitive, thus our retailers had to bid aggressively for prominent mobile placements. In August, we saw average position for our clients drop month-over-month despite the increase in CPCs, which indicates that stronger competition for back-to-school drove up CPCs.
- As mobile paid search matures, more brands are starting to fill out their mobile campaigns with additional generic keywords, which have higher CPCs. Advertisers are becoming more advanced in mobile—they have (1) built mobile sites, (2) built out brand keywords and (3) separated mobile and desktop campaigns to discriminate strategy between desktop, tablets and smartphones. Now that advertisers’ mobile programs are set up for success, the next step is to be more aggressive in using generic keywords to support device-specific campaigns—which we saw in August.
Moving into holiday, we expect mobile CPCs to continue to rise due to increased competition on generic keywords, especially on tablets. We think that it’s possible that tablet CPCs will catch desktop CPCs by the end of the year. However, we expect smartphone CPCs to remain significantly below desktop. Smartphone CPCs are just too far behind, and precise location targeting abilities on smartphones make smartphone ads highly relevant, thus improving quality scores and keeping CPCs low.
During back-to-school, mobile CTRs remained significantly higher than desktop. Tablets continue to score the highest CTRs of all devices. Outstanding tablet CTRs have been driven by our retailer clients. As savvy searchers increasingly turn to their tablets to shop, these retailers have benefited from building tablet-specific, tablet-friendly experiences for their shoppers.