The 2012 Retail Season in Paid Search Advertising

Today, we released some data findings from our own Dr. Sid Shah, director of business analytics for Advertising Solutions, on paid search advertising among online retailers from the 2012 holiday season. For digital marketers and advertisers, three trends emerged:

1.       Paid search spend in retail grew 16% Year-over-Year (YOY)

  • Online retail spend increased by 16% YoY (from Q4 2011)
  • Google increased its market share in retail paid search to 86.5% percent, up from 85.9% in Q4 2011
  • Growth attributed to strong mobile traffic and the transition of Google Shopping from a free to a paid model (Product Listing Ads – PLAs)

2.       Mobile traffic doubles in a year as mobile now accounts for 1 in 5 clicks in retail

  • Mobile continued to grow in Q4 2012; smartphones and tablets comprised 20% of all retail paid search impressions and ad spend
  • 100% increase of mobile traffic as percentage of overall paid search in one year
  • Tablet retail campaigns yielded 73% more conversions than desktop campaigns
  • Tablet CPCs are still lower than desktops (16% in Q4)

3.       Trend in seasonality driven by device unboxing

  • Widespread consumer adoption of smartphones and tablets drove major advertising shifts and retail dollars
  • Share of tablet impressions show consistent YoY growth starting immediately after Christmas – with similar trends in Europe

Key Takeaways and 2013 Predictions

  1. Online retailers should optimize PLA campaigns for bid and feed management. 
  2. Tablet traffic will represent 1 in 4 paid search clicks by end of 2013. Smartphones and tablets combined will represent 30% of all retail traffic.
  3. Marketers have a big opportunity to capitalize on tablet CPCs, which remain 16% lower than desktop campaigns while yielding a higher conversion rate.
  4. Any marketer with a sizeable search campaign and significant mobile traffic should create, manage, and optimize tablet and mobile-specific paid search campaigns.

For Sid’s full analysis and commentary on these trends, check out his post on our Digital Marketing Blog.