6 key paid search trends from Merkle’s Q1 2017 report

Merkle’s Digital Marketing Report for Q1 points to strong growth from Google and the continued strength of PLAs (Google Product Listing Ads). Expanded text ads have yet to yield promises of CTR gold. Bing and Yahoo’s lack of mobile market share is hampering growth. Here’s a look at some of the key trends from the report. (Keep in mind the data reflects spending from Merkle’s own client base, which skews large retailer.)

AdWords Q1 year-over-year growth outpaced that of Q4

Spending on Google AdWords increased 21 percent year over year in Q1 2017, up from 19 percent in Q4 2016. Click volume increased 20 percent over the previous year. CPCs ticked up 1 percent.

Merkle credits the addition of a fourth mobile text ad, PLAs in image search, Google Maps ads and the return of separate device bids as key contributors to growth over the past year.

Tablet bids fall, mobile bids improve relative to desktop

Tablet bids have steadily declined relative to desktop since Google enabled advertisers to bid separately on the two devices last summer. Merkle says decoupling tablets from desktop helped drive growth, with advertisers able to adjust bids separately for higher-value desktop clicks.

Google AdWords phone and desktop spend increased 51 percent and 12 percent, respectively, while tablet spend fell 23 percent.

Phone CPCs continued to gain ground on desktop in Q1. For non-brand queries, phone CPCs were 43 percent lower than desktop CPCs in Q1, compared to being 51 percent lower in Q4. Tablet CPCs were 25 percent lower than desktop in Q1, down from near-parity in early 2016, when the devices were combined in bidding.

Source: Merkle

PLAs keep growing faster than text ads

With 52 percent click share, PLAs accounted for more than half of retail search ad clicks in Q1, up from 48 percent in Q4. For non-brand queries, PLAs drove a whopping 75 percent of all clicks for retailers.

Spending on Google Shopping rose by 32 percent year over year in Q1, compared to 12 percent for text ads. Growing impression volume on mobile is helping to increase PLA click share, and growth was largely driven by non-brand queries.

Source: Merkle

Search partners, which includes Google image search, accounted for 11 percent of PLA clicks for the quarter, similar to Q4’s share.

Local Inventory Ads gaining traction

In Q1, Local Inventory Ads (LIA) accounted for 19 percent of all Google Shopping clicks on phones. CTRs on LIAs are 19 percent higher than PLAs on phone and desktop. Not surprisingly, online conversion rates for LIAs, which are designed to direct store traffic, are lower than PLAs.

CTR boost for expanded text ads (ETAs) remains elusive

Merkle has consistently reported seeing mixed results since ETAs first came on the scene last year. The Q1 results for ETAs show a CTR lift compared to standard text ads only on desktop ads shown at the bottom of the page.

After accounting for device, keyword type, and ad location, there is still no clear evidence that Expanded Text Ads are producing consistently higher click-through rates than the legacy Google text ad format.

Source: Merkle; high-traffic ad groups with both formats active in Q1

Overall, text ad spending on Google increased by 12 percent. However, non-brand text ad spending rose 16 percent year over year. Merkle says the fourth mobile ad unit and the addition of ads in Google Maps has done more to buoy text ad growth than format changes.

Bing & Yahoo mobile troubles

Across Bing Ads and Yahoo Gemini, spend fell by 14 percent compared to the previous year, marking the fifth consecutive quarter of spend declines.

With Google as the default search option on Android and iOS devices, mobile weakness continues to be a considerable handicap for Bing and Yahoo. Google accounted for 97 percent of mobile phone traffic in Q1. Bing and Yahoo clicks made up 19 percent of desktop clicks for the quarter.

There is much more detail in the report, including on organic, social and Amazon. It’s available for download here.

About The Author

As Third Door Media’s paid media reporter, Ginny Marvin writes about paid online marketing topics including paid search, paid social, display and retargeting for Search Engine Land and Marketing Land. With more than 15 years of marketing experience, Ginny has held both in-house and agency management positions. She provides search marketing and demand generation advice for ecommerce companies and can be found on Twitter as @ginnymarvin.

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Author: Ginny Marvin

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