The fourth quarter of 2013 was an impressive one for global web search advertisers, who achieved record CTRs (click-through rates) to close out the year.
While global clicks fell slightly year-over-year (with the net effect that they were essentially unchanged), click-through rates soared to record highs. They improved nearly 30% beyond the same quarter last year, and more than 40% from the third quarter of 2013, according to a report from search advertising agency Covario.
Cheaper, more effective ads a boon for advertisers
While CTRs soared, CPCs (cost-per-clicks) actually declined 3% from the preceding quarter, though they were still up 10% from the same period the year before.
There was also a large fluctuation between search engines in CPC both from the previous quarter, as well as the past year. Google was down 3% from the previous quarter, though up 10% from a year ago, while the Yahoo Bing Network performed in the opposite manner, falling 6% from the previous year, but rising 12% in the final quarter of 2013.
The Covario report’s author, Alex Funk, attributes the fluctuations to several factors. He stated that “the mid-year update to Google’s Enhanced Campaigns, soaring mobile investment and PLA growth has meant anything but stable CPCs”.
CTRs saw particularly strong growth in Europe, Asia, and Africa, with rates up 60% from the previous year. CTRs were also strong on China’s preeminent search engine Baidu, where they remained higher than average.
One reason for the improved CTRs is a combination of less ad space and more targeted ads, according to IgnitionOne’s President Roger Barnette. In an interview with Search Engine Land, Barnette said that less ad space due to top-of-the-page innovations such as image ads are “decreasing the overall number of ads that are showing up for any given search and thus lowering overall impression volume. It’s actually one of the advantages of utilizing these tools, not only do CTRs improve but it pushes the competition further down or off the first page.”
Mobile spending continues to soar
Not surprisingly, mobile spending was up significantly last year, and now accounts for 20% of global PPC spending, according to the report. Smartphones account for 34% of mobile spending, and tablets generate the remaining 66%.
Smartphone spending was up considerably YoY at 253%, while tablets also saw continued strong growth at 82%. CPCs for mobile platforms remained significantly below those of desktops, despite impressions and clicks rising dramatically over the course of the year, particularly on smartphones.
Smartphone CPCs were 47% lower than desktop CPCs, while CPCs for tablet devices were 14% lower than those of desktops.
Video ads to see continued growth on desktops
Desktop ad spending is expected to taper off in the coming years as more and more consumers shift the majority of their Internet viewership to mobile devices. The trend is already fully in evidence at Facebook, where the company is seeing a decrease in desktop ad revenue, while mobile ad revenue continues to soar and could eclipse desktop income this year.
While the overall ad industry is not shifting at quite the same speed, eMarketer does expect mobile ad spending to outpace that of desktop spending by 2017.
However one continued area of growth for desktop ad spending will likely be in the area of video advertising. YouTube alone was expected to pull in $5.6 billion in ad revenue in 2013 — the majority of that coming from video ads.
That’s one format where desktops continue to have an advantage over their mobile counterparts, with high-speed Internet services such as VDSL, more RAM, and larger screens making it preferable for users with both formats to do the bulk of their YouTube and video viewing on their desktops.
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