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Benchmarking REport
- 1. The Q3 2014Performance Marketer’s Benchmark Report: Vital Search, Social & Display Performance Data by Device WHITE PAPER
- 2. The Q3 2014Performance Marketer’s Benchmark Report: Vital Search, Social & Display Performance Data by Device TABLE OF CONTENTS Introduction 03 Methodology 03 Key Takeaways 03 Shifting Landscape of Device Usage Amongst Consumers 03 Advertiser Response to Changing Consumer Trends 04 Performance Across Search, Social and Display by Device 07 Conclusions 09 About Marin Software 10 Copyright © 2014 Marin Software Inc. All rights reserved. 2
- 3. 3 The Q32014 Performance Marketer’s Benchmark Report: Vital Search, Social & Display Performance Data by Device INTRODUCTION Historically, Q3 has been a critical quarter for advertisers across all key verticals. Many marketers use Q3 as a way to get ready for Q4, which is frequently their most important quarter. But how should advertisers plan their spending to get the most bang for their buck? To answer this question, we took a look at the Marin Global Online Advertising Index to try and understand how device and platform performance have shaped up over the past quarter. METHODOLOGY To understand device and platform performance for Q3 2014, we sampled the Marin Global Online Advertising Index, which looks at over $6 billion worth of advertising spend in the Marin platform. The Index consists of enterprise-class marketers: larger advertisers and agencies who spend in excess of $1 million annually on paid-search, social, and display advertising channels. As such, our data sample and findings skew towards the behavior of larger organizations and more sophisticated advertisers. We examined this data longitudinally year-to-date, and measured key performance indicators (KPIs) on a quarter-over-quarter (QoQ) basis. Wherever possible, we used medians and indexed values to more clearly highlight overall trends instead of overall values. This allowed us to mitigate the effects of outliers, and make the findings more representative of the performance of the typical Marin client. We focused our findings on device and platform data. Please note that for the social channel, it was only possible to break out the data on the desktop and mobile device level. Mobile device is an aggregate of both smartphone and tablet. KEY TAKEAWAYS: 1. Mobile devices are taking up more and more consumer attention and advertiser budget than ever before. 2. Consumers are still converting on desktops over mobile devices, although advertisers are getting better at optimizing towards mobile conversions. 3. Differences in click-through rates, cost-per-click, and conversion rates across channels require a more holistic approach to spending. SHIFTING LANDSCAPE OF DEVICE USAGE AMONGST CONSUMERS Over the past several years, we have come to live in an increasingly multi-device world. The explosive growth and spread of smartphones and tablets have fundamentally changed how people communicate, socialize, and purchase products. QoQ smartphone usage has risen across all channels. Consumers are now using mobile devices more than ever, driving over 50% of all social sharing.1 According to ComScore, consumers are spending one out of every three minutes of all online browsing time on mobile devices2 and that activity is only expected to increase. By the end of 2014, there will 1 http://www.iab.net/media/file/ShareThis_CSTR_July2014.pdf 2 http://www.comscore.com/Insights/Presentations-and-Whitepapers/2013/2013-Mobile-Future-in-Focus
- 4. 4 The Q32014 Performance Marketer’s Benchmark Report: Vital Search, Social & Display Performance Data by Device be 1.2 billion smartphones sold, 23.8% greater than last year.3 From Q1 to Q2 2014, mobile browsing activity grew 19%, with online browsing activity on smartphones growing by 27.8%. Conversely, desktop browsing activity dropped 5.5%.4 This increased mobile browsing activity signals a shift in consumer behavior from desktops, to smartphones and tablets. ADVERTISER RESPONSE TO CHANGING CONSUMER TRENDS As a result of the apparent shifts in consumer device usage towards smartphones and tablets, advertisers are also beginning to adapt their strategies to focus more on these devices. We took a look at search, social, and display advertisers in the Marin Global Online Advertising Index to understand just how consumer behavior has changed advertiser spend across the globe. Unsurprisingly, there have been large shifts away from desktop over the last few years, with mobile devices taking up more and more of advertiser budgets and time. Across search, we’ve seen mobile device (smartphones and tablets) share increase significantly in the past year, with smartphones capturing the lion’s share of the growth. Year-over-year (YoY), desktops have lost 8.5% click share, with smartphones snapping up 6.1%. While advertisers devote just over 42% of all spend on mobile devices, mobile conversions only make up about 30% of search conversions. What this means is twofold: 1. That advertisers still have issues with correctly attributing mobile conversions as well as converting a mobile search click to a mobile conversion, and 2. That consumers are still not as comfortable on converting on mobile as they are on desktops. As many customers use mobile devices for initial research on products, the gap between mobile click share and conversion share may be explained by consumers using mobile advertising to initiate the purchase cycle, which they complete in store. In fact, according to Google, mobile clicks may convert into in-store purchases,5 or saved as a reference for a later at-home purchase on a desktop due to the relative ease of desktop form-fills. Interestingly, while smartphone spend outpaces smartphone clicks and conversions, we see an opposite trend with tablet devices, which makes up only 8% of ad spend, but 15% of clicks and 12.4% of conversions. Search Advertising Share by Device: Q3 2014 Desktops Smartphones Tablets 13.6% 15.0% 8.0% 12.4% 17.5% 22.7% 34.5% 17.4% 68.9% 62.2% 57.4% 3 http://www.idc.com/getdoc.jsp?containerId=prUS25058714 4 http://www.iab.net/media/file/ShareThis_CSTR_July2014.pdf 5 http://adwords.blogspot.com/2013/02/understanding-full-value-of-mobile.html 70.2% Impressions Clicks Spend Conversions
- 5. 5 The Q32014 Performance Marketer’s Benchmark Report: Vital Search, Social & Display Performance Data by Device -5.5% Search Advertising Share: Year over Year Change Desktops Smartphones Tablets -8.5% -7.6% Device share for the display advertising channel exhibits similar characteristics to search. Mobile impression, click, spend, and conversion share amongst display advertisers has grown at a significantly higher rate YoY than search. Smartphones have taken up much of this growth, with desktops losing over 10% click share, which has almost exclusively shifted to smartphones. There is a much heavier mobile device focus for display than there is for search. Almost half of all display spend in Q3 was on mobile devices, and over half of clicks. Again, there is a discrepancy between smartphone and tablet spend versus clicks, where tablet clicks outpace tablet spend, and vice versa for smartphones. This is due to the aforementioned increase in mobile device usage across the world and the corresponding increase in mobile display ad exchanges. Mobile-focused display advertising has been on many advertisers’ minds, with Google even recently revealing new mobile display ad formats.6 Display Advertising Share by Device: Q3 2014 Desktops Smartphones Tablets 12.9% 16.5% 9.8% 15.9% 6 http://venturebeat.com/2014/09/29/google-rolls-out-new-display-ads-for-mobile/ -10.3% 2.9% 6.1% 6.4% 10.6% 2.6% 2.4% 1.2% -0.3% Impressions Clicks Spend Conversions 60.5% 45.8% 50.0% 61.4% 26.6% 37.7% 40.1% 22.7% Impressions Clicks Spend Conversions
- 6. 6 The Q32014 Performance Marketer’s Benchmark Report: Vital Search, Social & Display Performance Data by Device Display Advertising Share: Year over Year Change Desktops Smartphones Tablets 12.1% 10.2% -14.1% 2.0% 0.2% -10.4% 20.1% 10.9% -4.8% -15.3% -15.8% 5.0% Impressions Clicks Spend Conversions In Q3, over 50% of impressions, clicks, and spend on social channels were on mobile devices. This is because social networks have the fastest mobile user growth of any channel. In Q2 this year, over a billion Facebook users accessed the site via a mobile device, with about 400 million of those users being mobile-only.7 This explosive mobile usage for social channels has fueled advertisers to pour money into this channel. However, social conversion share by device is still mostly desktop-focused, with 65% of all social conversions happening on a desktop computer. In fact, social mobile conversion share is less than display conversion share, even though social mobile click and spend share are far greater than display. There is a disconnect between social channel spend and actual conversions. Consumer intent on social networks does not center on finding products and services, which makes them less likely to convert. This is in contrast with consumer intent on search, where the very act of searching is when they are directly looking for specific items, which increases chances of engagement and conversion on ads. Social Advertising Share by Device: Q3 2014 47.7% Desktops Mobile 37.0% 39.1% 64.8% 52.3% 63.0% 60.9% 35.2% Impressions Clicks Spend Conversions 7 http://www.pewresearch.org/fact-tank/2014/02/04/overseas-users-power-facebooks-growth-more-going-mobile-only/
- 7. 7 The Q32014 Performance Marketer’s Benchmark Report: Vital Search, Social & Display Performance Data by Device PERFORMANCE ACROSS SEARCH, SOCIAL, AND DISPLAY BY DEVICE This shift in both consumer behavior and advertiser spend has also affected how consumers interact and engage with advertising. Understanding advertiser click-through rates, cost-per-click, and conversion rate reveal the story in how the bottom line has been affected. When we look at click-through rate by platform, we see very similar trends across search, social, and display. Smartphones are clearly the device with the highest click-through rate, suggesting that mobile devices, and especially smartphones, may capture the majority of consumer engagement. However, search stands out as the clear leader in click-through rate across all devices when compared to performance on social and display channels. Social and display click-through rates lag behind sharply, with both under 1%. Historically, social and display CTRs have always been significantly behind search due to consumer behavior. Display and social ads are served when consumer intent is not centered on searching for a product or service, and thus consumers are unlikely to interact with them. In addition, display is a passive channel, which lowers the possibility of consumer engagement. 2.1% Click Through Rate Desktops Smartphones Tablets 0.4% 0.2% 3.1% 0.6% 0.4% 2.6% 0.3% Search Social Display Conversion rates tell us a completely different story. While CTRs are lowest on desktops, conversion rates are much higher on desktops than on mobile devices. Consumers are simply more willing to buy when on a desktop than on a mobile device. Again, this is partly due to mobile behavior, such as using a smartphone for research or an in-store visit, and also partly due to the relative ease of converting on desktop versus mobile devices. Attribution on mobile devices is much more difficult for marketers to quantify and has remained a challenge for many. There is still a lot of room for advertisers to improve when it comes to mobile conversion and mobile attribution tracking. Copyright © 2014 Marin Software Inc. All rights reserved.
- 8. The Q3 2014Performance Marketer’s Benchmark Report: Vital Search, Social & Display Performance Data by Device Conversion Rate Desktops Smartphones Tablets When we look at cost-per-click, we can see that it closely mirrors conversion rate behavior (above). Desktops are the leader in CPC for search, social, and display, and mobile devices lag behind, perhaps due to the lower conversion rates that can be easily attributed to smartphones and tablets. Interestingly, tablet search CPC is lower than that of smartphone, even though tablet conversion rates are higher. In addition, search CPCs are much higher than those of social and display, meaning that advertisers can buy more clicks for the same amount of spend on non-search channels. Also of note is how close desktop and mobile CPCs are for the social channel. This is a signal that with the increased investment in mobile on social, CPCs are levelling off and approaching parity with desktops. Cost Per Click Desktops Smartphones Tablets 84 87 Copyright © 2014 Marin Software Inc. All rights reserved. 8 9.8% 1.0% 5.1% 6.7% 0.3% 2.3% 7.2% 3.6% Search Social Display 100 16 14 50 73 61 Search Social Display
- 9. 9 The Q32014 Performance Marketer’s Benchmark Report: Vital Search, Social & Display Performance Data by Device CONCLUSIONS Over the past year, it has become clear that mobile devices and cross-channel marketing are becoming more and more an important part of digital marketing. Across all channels, mobile devices have been on the forefront of consumer and advertiser attention, with huge portions of ad spend and consumer time moving away from desktops towards smartphones and tablets. Consumer behavior also varies drastically by platform, and understanding the intersection between channel and device is crucial for the smart marketer to reach their audience and guide them towards conversion. Marketers should take advantage of the mobile reach and engagement that social platforms have, while leveraging the relatively higher conversion rates on desktops and search. Properly utilizing each platform and device to their relative strengths will become more crucial as we enter the holiday season in Q4. Advertisers also must closely examine their mobile campaigns in order to improve their conversion tracking. As mentioned before, mobile clicks can translate into in-store visits, phone calls, or desktop conversions. Until an advertiser can properly attribute these conversions back to the initial mobile click, it will be hard to definitively quantify the number of mobile conversions and conversion rate. Across the board, there is a disparity in mobile spend versus conversion share, and understanding where conversions are coming from can help an advertiser correctly allocate spend to where it drives the most revenue. Online advertising will only continue to shift across both channel and device as the marketplace becomes more saturated with smartphones and tablets around the world. With tools like Marin Software to help advertisers understand cross-channel and device performance, it becomes easier for advertisers to find crucial opportunities in this ever-changing space to reach and engage their audiences. Copyright © 2014 Marin Software Inc. All rights reserved.
- 10. The Q3 2014Performance Marketer’s Benchmark Report: Vital Search, Social & Display Performance Data by Device ABOUT MARIN SOFTWARE Marin Software Incorporated (NYSE:MRIN) provides a leading cross-channel advertising cloud for performance marketers to measure, manage and optimize more than $6 billion in annualized ad spend across the web and mobile devices. Offering an integrated SaaS platform for search, display and social advertising, Marin helps digital marketers improve financial performance, save time, and make better decisions. Advertisers use Marin to create, target, and convert precise audiences based on recent buying signals from users’ search, social and display interactions. Headquartered in San Francisco, with offices worldwide, Marin's technology powers marketing campaigns in more than 160 countries. For more information about Marin's products, please visit: http://www.marinsoftware.com/solutions/overview. United States San Francisco 123 Mission Street 25th Floor San Francisco, CA 94105 Tel: +1 (415) 399-2580 EMEA United Kingdom 1st Floor, Orion House, 5 Upper St Martin’s Lane, London, WC2H 9EA Tel: +44 (0)845 262 0404 France Actualis Level 2 21 and 23 Boulevard Haussmann Paris 75009 Tel: +33 1 80 95 68 60 Germany Neuer Wall 63 20354 Hamburg Tel: +49 40 80 80 74-522 Ireland Suite 204 28-32 Upper Pembroke Street Dublin, 2 (415) 399-2586 123 Mission Street, [email protected] 25th Floor www.marinsoftware.com San Francisco, CA 94105 New York 215 Park Avenue South Suite 1801 New York, NY 10003 Tel: +1 (646) 490-2427 Chicago 140 S. Dearborn Street Suite 300-A Chicago, IL 60603 Tel: +1 (312) 267-2083 Austin 800 Brazos Street Suite 320 Austin, TX 78701 Tel: +1 (512) 287-7478 Portland A317 SW Alder Street Suite 850 Portland, OR 97204 Tel: +1 (971) 302-6191 © 2014 Marin Software. All rights reserved. Other trademarks belong to their respective owners. WP 565_101614 APAC Singapore One Raffles Quay North Tower, Level 25 048583 Tel: +65 6622 5888 Japan 3rd Floor, Sanno Park Tower 2-11-1 Nagata-cho Chiyoda-ku Tokyo 100-6162 Tel: +81 3 6205 3179 Australia Level 33 Australia Square 264 George Street Sydney NSW 2000 Tel: +61 (0)2 9258 1820