As mobile devices become more advanced, networks get faster and more people become smart phone owners, it’s only natural that the number of people using mobile devices to search the web is exploding. Efficient Frontier partnered with Macquarie Equities Research to put together a unique study analyzing how user behavior is changing as search evolves on mobile devices.

One of the key themes of 2011 is the explosive growth of mobile Internet access. Many sites are seeing 10-15% of their traffic coming from mobile devices, and these numbers are even more pronounced in key verticals such as consumer electronics and restaurant-related searches. Naturally, the amount of paid search impressions is increasing too. We’ve learned that 5.4% of all paid search impressions currently come from mobile devices, up 9 to 12 times from a year ago.

As further proof, Efficient Frontier search spend on mobile has seen a more than seven-fold increase, going from 0.5% in April 2010 to 4.2% today, and this number could easily double by the end of 2011. We estimate that somewhere between 7.0%-9.5% of search advertising dollars could be spent on mobile devices by the end of the year, and it may look something like this:

Efficient Frontier – Mobile as a % of Total U.S. Search Ad Spending (with projections)

Some other notable findings in our study include:

  • Google Utterly Dominates; 97% of Mobile Search Ads – For Efficient Frontier’s clients, 3.2% of mobile spend goes through Bing/Yahoo.
  • Notable Differences between Mobile and Desktop Search Metrics – Mobile searches have a click-through-rate 30% lower than desktop. Surprisingly, mobile cost-per-click is 13% higher than desktop according to Efficient Frontier’s data.
  • Traditional ROI Calculation Highlights Need for Physical World Link to Mobile Search – Given the limited transactions completed on mobile devices, mobile search ROI is just 10% of desktop ROI, though iPad is significantly better.
  • GOOG gains $50mm for each 1% share shift to Mobile Search in the U.S.; YHOO loses $20mm, though this excludes revenue from incremental searches.
  • iOS vs. Android; Risks and Opportunities – With ~50% of iOS searches on the default “toolbar”, Apple significantly influences mobile search share. Android’s success helps Google maintain more control of mobile search share.

As mentioned above, mobile traffic is significantly increasing across the board, and it’s even more pronounced in several key verticals including restaurants, automobiles and consumer electronics. Here’s what we’ve found:

Google – Percentage of Overall Google Queries that are Mobile (by category)

So what does all of this mean to marketers? It seems only logical that marketers will begin to allocate more of their advertising budgets to mobile search over time, but we feel that there’s a great opportunity to be capitalized on. Data from YHOO indicates that the Internet accounted for 28% of an average user’s total media consumption last year, but represented only 13% of total advertising spending. We agree with the notion that this gap will narrow over time, and see the same dynamic playing out in mobile (i.e: as more and more users get access to smart phones and tablets with full browsers, mobile Internet access will continue to ramp). We also note that Google recently estimated that by the end of 2011, 50%+ of Americans will have smart phones.

A surprising disparity in mobile cost-per-click (CPC) also came to light: the average CPC on mobile search campaigns was actually slightly above (13% higher) CPCs for desktop search campaigns, which is notable given the lower return-on-investment (ROI) generated by mobile ad campaigns. That said, we believe this reflects that mobile is primarily being used as a branding medium for many advertisers at the moment, and that the typical revenue-based definition of ROI is a less scrutinized metric for branding-based campaigns.

Efficient Frontier: Comparison of Mobile Search CPC, CTR, and ROI metrics vs. Desktop Search

Over time, we believe that as advertisers take a more “holistic” view of the ROI from their mobile search campaigns (including the value in the data provided by a location-aware mobile device), CPCs for mobile search may eventually exceed those of desktop searches.

This is just the tip of the iceberg when it comes to analyzing mobile search behavior and looking at potential marketing opportunities. To learn more about our discoveries and request a complete copy of the Macquarie report, visit

-Dr Siddharth Shah
Sr. Director, Business Analytics