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Door closing on opportunity for mobile paid search bargains

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With the era of bargain pricing in mobile paid search nearing an end, marketers can expect a tougher time breaking through on smartphone screens unless they have big budgets or can enhance their strategies through contextual relevance, social and voice.

After years of languishing, the cost of paid mobile search began to rise in 2013 and is expected to continue on an upward trajectory throughout this year. While big budgets will increasingly be required for landing a prominent placement in search results on mobile screens, savvy marketers will find new ways to break through in paid search.

“One of the unique challenges with mobile search is that ad space is more limited, with only the top two positions providing strong visibility,” said Jeremy Hull, Fort Worth, TX-based director of bought media at iProspect. “Brands that can just throw more and more money at their mobile strategy will be able to stake out these top spots, and brands whose ads sit in third position due to lower bids will not see much mobile traffic at all on these ads.

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“Smaller marketers should identify opportunities within their audience and go after them in a targeted manner, for example, utilizing geo bid modifiers or geo-targeting to focus their spend on specific markets and try to reach the top two mobile positions in those locations, rather than more broadly,” he said.

Mobile CPC rates increase
A recent report from Marin Software, “Mobile Search Advertising Around the Globe: 2014 Annual Report,” found that the average cost per click of search ads on smartphones grew 21 percent in 2013 and was up 23 percent for tablets, pointing to growing competition among mobile advertisers.

Additionally, mobile is expected to surpass desktop paid search on Google by the end of 2015.

Another key finding is that the conversion rate for paid search on smartphones and tablets is growing, suggesting consumers are increasingly using mobile devices to complete transactions, with tablet conversion rates surpassing desktop’s rate for the first time.

The findings are good news for Google, which has struggled with making money from mobile search as the rates have traditionally been much lower than on desktop.

An important takeaway for marketers is mobile is becoming the primary channel for search and, increasingly, they will need to dig deeper into their pockets if they want to secure a prominent place in mobile results.

Smarter marketers
Marketers are bidding more aggressively on mobile paid search for several reasons.

One is that they are beginning to learn to quantify mobile’s potential.

“Marketers are being smarter about how they measure mobile success, optimizing to new KPIs such as calls, cross device conversions and even in-store visits,” Mr. Hull said.

Another reason is Google’s introduction of Enhanced Campaigns last year, which has made it easier for less experienced marketers to expand their paid search strategy into mobile.

Tablet CPCs in particular have benefitted from Enhanced Campaigns because advertisers are not able to separate out bids for tablets.

With many marketers waiting until after the important holiday period to begin experimenting with Enhanced Campaigns, the boost to CPC rates driven by Enhanced Campaigns is likely to only gain steam this year.

Gathering information
Last fall, Google also introduced an estimated cross-device conversion measurement to help advertisers quantify how effectively a click on a mobile ad leads to a purchase on another device.

These developments are pushing marketers to accept the important role that mobile is playing in search and to spend accordingly.

“For many search advertisers, mobile search queries make up as much as one-third of their total ad impressions, but until recently, a number of these same companies were significantly underspending in mobile search,” said Matt Grebow, group director of paid search at The Search Agency, Los Angeles.

“What’s changed for many search advertisers is a tacit acceptance that a mobile search, while not always the last action undertaken before a purchase, is nonetheless an important part of how people gather information and learn about products,” he said.

While mobile CPC rates are growing, they are of today still lower than on desktop, meaning there are still some opportunities for smaller brands.

This is especially true when the on-the-go, I-need-it-now nature of mobile is taking into consideration.

“It is important to keep in mind mobile search, particularly on smartphones, is different than desktop search,” said Greg Kunkel, global communications manager at Marin Software, San Francisco.

“People are often searching on the go and for very specific items or locations – restaurants, store locations, in-store comparisons, etc.,” he said. “Because search on smartphones is different, there will be a place for smaller brands in the SERP.”

Need for flexibility
In addition to geo-targeting paid search on mobile, there are other ways that marketers can compete against brands with bigger budgets.

Taking advantage of mobile ad types such as click-to-call can also help marketers boost the mobile search performance.

With consumers using social platforms more for discovery and search, and often from a mobile device, marketers can access important insights to effectively reach an audience on platforms such as Facebook and Twitter.

There is also a growing focus on voice searches from both consumers and search platforms such as Google. However, marketers, for the most part, have not yet adjusted to this trend. Voice searches are often in the form of a question and include more detail, requiring marketers to look at how to provide relevant content in order to earn visibility in search results.

Search engines are also looking at expand mobile search in more contextually relevant ways, such as serving relevant ads to commuters within their map apps.

“Smartphone owners are comfortable moving between devices; advertisers should be equally flexible,” The Search Agency’s Mr. Grebow said.

“The implication of these trends is that mobile search, perhaps nearer in the future than we think, may cease being thought of as a separate marketing channel, and instead an integral part of how we all connect to the world around us,” he said.

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

Associate Editor Chantal Tode covers advertising, messaging, legal/privacy and database/CRM. Reach her at chantal@mobilemarketer.com.

 
Related content: Search, paid search, Google, iProspect, Jeremy Hull, The Search Agency, Matt Grebow, Marin Software, mobile marketing, mobile

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Comments on "Door closing on opportunity for mobile paid search bargains "

  1. Ned Newhouse says:

    March 21, 2014 at 11:17am

    Interesting article. We all know Google dominates mobile revenue. If SEM mobile prices are indeed going up, just like it did 10 years ago for desktop, then in turn (just like it did a decade ago) will push up cpms and demand for mobile display, native esp on quality sites. To complete the circle, it’s not just a matter that SEM performs better, it must also come with HTML5 creative display ads that inspire consumer to be interested in the offering.
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