Analysis of 6.87 billion paid clicks by Adobe Digital Index shows that cost-per-click (CPC) increased across search and social paid advertising in Q4, but CPCs for Google’s new product listing ads (PLAs) saw the largest spike—up 70% in Q4

1. Adobe Digital Index/ Online Media
The adage “a picture is worth
a thousand words” takes on
new meaning in search
advertising:
Analysis of 6.87 billion paid
clicks by Adobe Digital Index
shows that cost-per-click
(CPC) increased across search
and social paid advertising in
Q4, but CPCs for Google’s
new product listing ads (PLAs)
saw the largest spike—up
70% in Q4 2013 (80% year
over year).
@AdobeIndex

2. A Picture is Worth a Thousand Words
Talk about the power of a picture—or, in this case, an image-based ad format.
According to Google, PLAs are “search ads that include richer product
information, such as product image, price, and merchant name, without requiring
additional keywords or ad text.” For example:
@AdobeIndex

3. CPCs for Google PLAs spiked 70% in Q4
In comparison, the average CPC for Google’s standard search ads increased only 4% in Q4 (11% year over
year). The big takeaway: Growth of PLAs represents a transformation in paid search advertising from singleformat text ads to a more varied, diverse marketplace filled with multiple ad formats that include many paid
social options for digital advertisers.
@AdobeIndex

4. Bigger Than Bing
Overall, advertisers that use both Google PLAs and standard text ads are now seeing about 22% of clicks from PLAs. In
comparison, Bing/Yahoo captures about a fifth of search. PLA growth has come on top of a growing market, with total paid
search clicks up 16% since 2012. The success of PLAs is a very positive sign for Google. It signifies both increased revenue
potential—advertisers are willing to pay more for ad formats that work better—and better diversification—greater
diversity in ad formats equals better hedging of advertising revenue.
@AdobeIndex

5. ROI Roughly Flat
Retailers should expect even more competition for the “product image plus price” ad format. Even as costs skyrocketed in
Q4, the return on investment from PLAs stayed relatively flat since last year. As the paid search space becomes
increasingly complex, the need for marketers to employ scalable, algorithmic solutions that can handle that complexity
and compute the optimal allocation of advertising budgets will be greater than ever.
@AdobeIndex

6. Predictions And Recommendations For 2014
1. Despite the strong Q4 results, PLA CPCs are expected to fall this quarter as retailers regroup and
evaluate budget allocations. Q1 traditionally sees the lowest search CPCs, and in 2014 retailers will need
some time to prove the lifetime customer value of new PLA traffic.
2. Expect more vertical-specific ad formats as PLA success signals a shift from text-only to more
informative image-based search ads. The product images used by PLAs are more informative to
shoppers looking to quickly determine which retailers have the items they are ready to buy. Advertisers
should expect that search engines will look for similar solutions to serve the needs of searches with
other goals in mind.
3. For retailers, success with PLAs will depend on deeper cross-functional collaboration. PLA advertising
enables marketers to drive placement to move inventory or maximize margins, whereas traditional text
advertising is more copy-based. PLAs pricing levels determine not just orders, but whether ads are even
served or clicked on in the first place. This strengthens the link between marketing performance and all
other aspects of business. Organizations that streamline data communication between departments will
stand to reap the greatest benefits.
4. Fragmentation will continue. Decisions about multiple ad platforms and channels have always existed.
More recently, digital advertisers have needed to add multiple devices types to their buying decisions—
and now PLAs ad a new dimension to consider in that decision. Marketers will need to find more
sophisticated ways to scale digital marketing across so many emerging ad formats and platforms.
@AdobeIndex

7. About Adobe Digital Index
Follow @AdobeIndex on
Twitter for the latest digital
marketing trends and
insights.
@AdobeIndex