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 http://​www​.efron​tier​.com/​r​e​s​e​a​r​c​h​/​w​h​i​t​e​p​a​p​e​r​s​/​m​o​b​i​l​e​-​s​e​a​r​c​h​-​s​c​a​l​i​n​g​-​f​a​s​t​-​g​o​o​g​l​e​-​d​o​m​i​n​a​t​ing.

–Dr Sid­dharth Shah
Sr. Direc­tor, Busi­ness Analytics