Mobile search grew significantly in 2011, with Google?s share of clicks from mobile devices increasing by 132 percent between January and December of last year, according to a new report from Marin Software.

The State of Mobile Search Advertising in the US report found that ad budgets increased at an even faster rate, with advertisers increasing their share of search budget on mobile devices from 3.4 percent to 8.7 percent during the year, a jump of 156 percent. The driving factor behind the significant growth was the dramatic increase in smartphone and tablet penetration.

?The first big piece of news for marketers is the dramatic growth in mobile search clicks and the underlying trends behind that,? said Matt Lawson, vice president of marketing for Marin Software, San Francisco, CA.

?The predication that 25 percent of all paid search clicks will come from mobile ? that is a staggering number,? he said. ?If a quarter of all your paid search clicks are going to be coming from mobile, you really need to start thinking about search differently.

?The second big piece of news is that mobile offers a really attractive investment option for advertisers right now. It is a very favorable time for advertisers to invest and we think that they will invest more."

Doubling search budgets
By the end of this year, Marin forecasts that mobile devices will account for 25 percent of all paid-search clicks on Google and that 23 percent of Google?s paid-search spend in the United States will come from mobile campaigns.

Despite the significant growth in mobile search ad budgets last year, ad budgets lagged behind the click volume arising from smart mobile devices, reflecting that there is room for more growth in mobile search.

?We think there is a lag between the adoption of mobile and the budgets that are chasing it,? Mr. Lawson said. ?Advertisers are going to have to more than double their budgets to catch up to the level at which consumers are searching via mobile.?

Mobile search provides strong results for advertisers, another reason it is becoming an attractive option, per the report.

Smartphones and tablets tend to have higher click-through rates than desktop. In 2011, the average click-through rate for desktop was 2.39 percent, for smartphones it was 4.12 percent and for tablets 3.12 percent.

One reason for the higher click-through rates is that only two results typically appear on smartphone screens.

Additionally, the cost per click on smartphones and tablets is much lower than on desktop. The average cost per click by device in 2011 was $0.83 for desktop, $0.53 for smartphones and $0.63 for tablets.

However, when it comes to conversions, smartphones underperform compared with desktop and tablets. This may be because some of the conversions are taking place in a store or via an app, both of which are harder to track.

The average conversion rate in 2011 was 5.2 percent for desktop, 2 percent for smartphones and 4.9 percent for tablets.

Tablet search
The report also points to the significant opportunity for in tablets, where mobile clicks are growing. During July of last year, tablets accounted for 31.6 percent of all mobile clicks and, by December, that number had risen to 37.9 percent.

?There are actually more smartphones out there than tablets but it would appear that people are searching more from tablets than phones,? Mr. Lawson said. ?We were surprised to find that the conversion rates for tablets was comparable to desktop and that the cost per conversion was lower than on desktop.?

Marin recommends that marketers separate out mobile search as a separate strategy so that they are bidding on mobile-appropriate words and leveraging relevant ad extensions such as click-to-call or location extensions.

Marin also recommends including device-specific ad copy in paid search ads so that consumers know a link will take them to a mobile-optimized experience.

Because smartphone browsers support fewer ad units, it is also important that marketers bid appropriately to insure that their ads are in position 1 or 2 in mobile.

?There needs to be a recognition by marketers of why mobile in general is huge and why tablets is a big category and that these might need to be treated separately, especially if you are doing commerce,? Mr. Lawson said.

?Tablets are going to play a big role in commerce this year and marketers need to think about how to optimize for their tablet device users,? he said.