The continued adoption of tablets coupled with strong performance for paid search efforts on these devices is driving an increase in tablet search budgets, creating a fast-growing, multi-billion dollar market, according to a new report from Marin Software.

Per the "Mobile Search Advertising Around the Globe" report, advertisers significantly increased their investment in paid search on tablets last year, with spend share growing from 4.8 percent to 10 percent in 2012. During the fourth-quarter of 2012, paid search spend on tablets eclipsed smartphones for the first time.

?The big news is that tablet conversion rates increased 31 percent through 2012, and at this rate they'll outpace desktops during 2013 to become an ecommerce powerhouse,? said Gagan Kanwar, director of partnerships and research for Marin Software, San Francisco.

?Cost-per-clicks for tablets increased 25 percent last year,? he said. ?This was a huge increase in 12 months and implies that marketers are seeing a lot of value in tablet advertising.?

Tablet CPCs increase
Overall, the share of Google paid-search clicks from mobile devices rose from 14.2 percent to 23.4 percent last year.

Additionally, advertisers increased their share of search budget on mobile devices from 10 percent to 18.4 percent, an 85 percent increase.

However, ad budgets continued to lag the click volume arising from smart mobile devices.

The even bigger story was the growing success of tablets in paid search, pointing to the way that consumers are increasingly using tablet devices to conduct research, shop for products and services and make purchases online.

Marin expects the spend on tablet search to continue to grow in 2013, projecting tablet search could drive upwards of $5 billion in revenue for Google in 2013.

Additionally, cost-per-click prices for tablet search ads increased 25 percent in 2012, and Marin predicts tablet CPC will equal desktop CPCs by the end of 2013.

By December 2013, Marin Software projects that tablets will account for 20 percent of Google?s paid search ad clicks in the U.S., up from six percent in January 2012 and 10.7 percent in December 2012.

Tablet commerce
Other key findings include that conversion rates on search clicks originating from tablet devices increased dramatically in 2012, rising 31 percent from January to December, pointing to the significant and growing role that tablets are playing in ecommerce. 

By the end of 2013, Marin estimates the conversion rate for searches originating from tablets will eclipse that of desktop searches.

In comparison, the average conversion rate for search clicks originating from smartphones was 2.8 percent in 2012.

Tablets also performed well in terms of click-through rates for search ads, delivering rates that were 37 percent higher than ads placed on desktop searches.

It is these favorable performance characteristics of tablet ads coupled with user adoption that are driving advertiser investment.

At the same time, the average cost-per-click for paid-search ads on tablets was 17 percent lower than for desktops, reflecting favorable economics for marketers.

The findings suggest that marketers need to be optimizing their search strategy separately from smartphones and desktop.

?We do expect to see more spending on tablets than on smartphones going forward,? Mr. Kanwar said.

?This is because conversion rates of tablets are significantly higher, and also because more people will buy tablets in 2013 than before,? he said.

?In contrast, smartphones have already reached more than 50 percent of the U.S. market, implying that growth will be slower. Marketers will be looking to invest in areas of the highest growth with the best conversion rates.?

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York