Q3 2012 Global DigitalAdvertising UpdateAdobe® Digital Index
Q3 2012 Global Digital Advertising UpdateTable of contents          Executive summary2:	Executive summary3:	Overall search...
Overall search trendsIn Q3 2012, search continued to grow in the U.S., U.K., and Germany. Growth continued in these countr...
%       Q3/11     Q4/11     Q1/12      Q2/12    Q3/12            Q3/11                       Q4/11          Q1/12         ...
100%                                                    100%                                 100%             Google down ...
Q3 2011                                Q1 2012                                                                            ...
Definitions                             Key terms in this report are defined as follows:                             •	 Co...
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Q3 2012 Global Digital Advertising Update by Adobe

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Q3 2012 Global Digital Advertising Update by Adobe

  1. 1. Q3 2012 Global DigitalAdvertising UpdateAdobe® Digital Index
  2. 2. Q3 2012 Global Digital Advertising UpdateTable of contents Executive summary2: Executive summary3: Overall search trends Social engagement and paid search continued to grow in Q3. In search marketing, spend grew by double digits5: Search by device type across geographies and ROI improved due to dollars shifting from offline to digital marketing. Bing/Yahoo’s5: Facebook update share of click volume fell, while Google shifted up slightly from Q2.6: Forecast for Q4 2012– Engagement, which is defined as likes, comments, and shares, grew 896% YOY, as shown in Figure 9. Mobile Q1 20136: Implications users account for nearly one quarter of all Facebook engagement up four-fold from the period prior. We6: Methodology surmise that increased engagement rates result from format changes made in the last three quarters, use of7: Definitions new acquisition and engagement metrics, and more effective social marketing by brands.7: Appendix7: About Adobe Digital The cost per click (CPC) downward trend caused by mobile traffic appears to have bottomed out and is Index projected to rise in Q4 due to seasonal trends and changes to the Google Shopping model.7: About Adobe Digital Marketing Suite A comparison of iOS and Android™ traffic reveals a monetization advantage for iOS of nearly two times that of Android traffic. For digital marketers and advertisers, these findings have four implications: • Social engagement is booming. The increase in engagement levels indicates that Facebook is becoming a more valuable advertising marketing channel than in the past. Marketers should capitalize on this trend to include more social marketing in their digital marketing initiatives. • Search, especially on mobile devices, should continue to be a major part of the marketing mix given growth in mobile device use and attractive ROI. • Marketers can drive higher returns by optimizing spend across devices. Search spend for iOS devices offers attractive opportunities. • Retailers need to account for additional spending on Google Shopping because that free service has t ­ ransitioned to a paid model.1 Adobe Digital Index Report 2
  3. 3. Overall search trendsIn Q3 2012, search continued to grow in the U.S., U.K., and Germany. Growth continued in these countriesdespite economic uncertainty, demonstrating the stability and importance of search for digital marketers.Increases in ROI continue to drive this growth trend. As in Q2 2012, healthy room for additional growth inspending exists. 2 Additionally, increased traffic across mobile devices shifted search spend to smartphones andtablets, changing CPCs, especially for Google.Spend and ROI—Figures 1 and 2 show that U.S. search spend grew 11% over the prior year, while ROIimproved by 26%. Search spend in the U.K. and Germany grew 36% and 25% year over year (YoY), respectively.Spend share for Google and Bing/Yahoo! were roughly flat over the prior quarter. Bing/Yahoo! increased share1% YoY, while Google’s share declined 1% (see Appendix Table 1). Germany down 17% YoY U.K. up 36% YoY U.S. up 26% YoY Germany up 25% YoY U.K. down 8% YoY Indexed at 100% 100% U.S. up 11% YoY Germany down 17% YoY Q3/11 Q4/11 Q1/12 U.K. Q2/12 YoY up 36% Q3/12 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 U.S. up 26% YoY Germany up 25% YoY U.K. down 8% YoYFigure 1—Overall spend by country Figure 2—Overall ROI by country Indexed at 100% 100% U.S. up 11% YoYClick volume and CPC—Click volume on Google recovered compared with the prior quarter, reaching a new highwithQ3/11 Q4/11 rolling average up 21% YoY, as shown in Figure 3. Bing/Yahoo’s increase in click volume, which a four-quarter Google upQ2/12 YoY 21% Q1/12 Q3/12 Q3/11 Q4/11 Q1/12 Q3 Q2/12 Q3/12 Q4had surged between Quarters 1 and 2, was short-lived, falling 14% to end at an 11% increase YoY. Due to growth in 2011 2011mobile search traffic where CPCs are cheaper and Google is more dominant, U.S. click.5%share for Bing/Yahoo gave 18.2% 81.8% 16.5% 83back some prior quarter gains, standing at 17% share, as shown in Figure 4. 100% Bing/Yahoo up 11% YoY Q1 Q2 Q3 2012 2012 2012 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Google up 21% YoY 16.9% 83.1% 18.5% 81.5% 17.0% 83.0% Q3 Q4 2011 2011 Bing/Yahoo 18.2% 81.8% 16.5% 83.5% Google 100% Bing/Yahoo up 11% YoY Q1 Q2 Q3 2012 2012 2012 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Bing/Yahoo up 6% YoY 16.9% 83.1% 18.5% 81.5% 17.0% 83.0% Clicks up 22% YoY Clicks up 7% YoY Bing/Yahoo Google 100% 100% 100% Google down 10% YoY CPC up 10% YoY CPC up 14% YoYFigure 3—Click volume by search engines, U.S. Figure 4—Click share by search engines, U.S. Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Bing/Yahoo up 6% YoY Clicks up 22% YoY Clicks up 7% YoY 100% 100% 100% Google down 10% YoY CPC up 10% YoY CPC up 14% YoY Spend up 15% YoY ROI up 50% YoY ROI up 13% YoY Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Adobe Digital Index Report 3 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 100% 100% 100% ROI up 21% YoY Spend up 10% YoY
  4. 4. % Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Germany down 17% YoY U.K. up 36% YoY U.S. up 26% YoY Germany up 25% YoY U.K. down 8% YoYFigure 5 shows CPCs on Google recovering slightly but still down 10 percentage points YoY, while Bing/YahooCPCs rebounded from theup 21%quarter to end up 6%. We attribute the decrease in overall Google CPCs to an Google prior YoY Indexed at 100% 100%increase in share of mobile 11% YoY U.S. up clicks, where CPCs are less expensive. The increase 2011 Q3 in Bing/Yahoo CPCs may be Q4 2011attributed to a recovery in the finance sector, where CPCs improved considerably 83.5% the prior quarter. Because 18.2% 81.8% 16.5% overCPCs in the financialQ1/12 tend to be much higher than average, fluctuationsQ2/12 Q3/11 100% Q4/11 sector Q2/12 Q3/12 Q3/11 Q4/11 Q1/12 in CPCs typically have a significant Q3/12 Bing/Yahoo up 11% YoYimpact on the CPC average for the overall index. Q1 Q2 Q3 2012 2012 2012TheQ3/11 Q4/11 Q1/12 Q2/12robust, likely as a result of offline marketing spend seeking more measureable European search market is Q3/12 16.9% 83.1% .5% 81.5% and 83.0% 18sharply from Q2 17.0% increased 22% YoY, andresults via search. Figure 6 shows that, in the U.K., click volume is upCPCs also edged up 4% for the quarter, increasing 10% YoY. Germany click volume decreased eight percentage Bing/Yahoopoints over the second quarter for growth of 7% YoY, while CPCs remained flat from the second quarter for a Google Google up 21% YoY14% YoY improvement. Q3 Q4 2011 2011 18.2% 81.8% 16.5% 83.5% 100% Bing/Yahoo up 6% YoY YoY Bing/Yahoo up 11% Clicks up 22% YoY Q1 Q2 Q3 Clicks up 7% YoY 2012 2012 2012 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 100% 16.9% 83.1% 18.5% 81.5% 17.0% 83.0% 100% 100% Google down 10% YoY CPC up 10% YoY CPC up 14% YoY Bing/Yahoo Google Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12Figure 5—CPC, U.S. Figure 6—Click volume and CPC, U.K. and Germany Bing/Yahoo up 6% YoY Clicks up 22% YoY Clicks up 7% YoYIndustry breakdown—Figure 7 shows performance trends for the automobile, ROI up 50% YoY financial services, and retail Spend up 15% YoY ROI up 13% YoYindustries in the United States. The auto industry saw a robust increase in spend and ROI, up 15% and 21% 100%respectively YoY, while maintaining flat CPC, consistent with broader 100% 100% recovery in this industry. The financial Google down 10% YoY CPC up 10% YoY CPC up 14% YoYservices industry, which saw a steep decline in CPC in Q2, bounced up turning CPC levels back to historical 100% 100%norms by increasing spend at 10% YoY and ROI at 50% YoY. The retail sector headed into its run up to the 100% Q3/11 Q4/11 ROI up 21% YoY Q1/12 Q2/12 Q3/12 Spend up 9% YoY Spend up 10% YoY Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12holiday season with spend and ROI increasing by 3% quarter over quarter. Retail CPC continued a downwardtrend ending up 9% down YoY, perhaps, in part, due to the increased use of mobile search. Overall, the search Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12market is poised to carry improvements in all sectors into the fourth quarter. Automobile [U.S.] Retail [U.S.] Financial Services [U.S.] Spend up 15% YoY ROI up 50% YoY ROI up 13% YoY Android = 100% Android = 100% CPC 193% Finance Android = 100% 100% 165 % ROI up 21% YoY 100% Spend up 9% YoY 100% Spend up 10% YoY CTR UK / Germany Travel CVR 200% USA Retail 199% Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q3/11 Q4/11 Q1/12 181% Q2/12 Q3/12 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 ROI Other Other Automobile [U.S.] Retail [U.S.] Financial Services [U.S.] 0 100 200 0 100 200 0 100 200Figure 7—Spend and ROI by industry Android = 100% Android = 100% CPC 193% Finance Android = 100% 165% CTR UK / Germany Travel CVR 200% USA Retail 199% 181% ROI Other Other 0 100% 100 91% 200 284% 0 100 649% 200 0 996% 100 200 Adobe Digital Index Report 4 Q3 2011 Q1 2012
  5. 5. 100% 100% 100% Google down 10% YoY CPC up 10% YoY CPC up 14% YoY Bing/Yahoo Google Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12SearchBing/Yahoo up 6% YoY by mobile operating system up 22% YoY Clicks Clicks up 7% YoYWhile overall search spend increased YoY across PC, smartphone, and tablet device types, conversion rates, ROI up 50% YoYCPCs, and ROISpend up 15% YoY varied widely. ConversionYoY by mobile operating system are increasing in for these devices 100% ROI up 13% rates 100%importance as mobile search traffic continues to rise. This indicates that marketers have significant 100% Google down 10% YoY CPC up 10% YoY CPC up 14% YoYopportunities to drive higher ROI by optimizing mobile search spend by device OS, findings consistent withthose in prior Adobe DigitalQ3/12 reports on the use of mobile devices and returns on mobile search spend. 3 Q3/11 Q4/11 Q1/12 Q2/12 100% Index 100% 100% ROI up 21% YoY Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q3/11 Q4/11 Q1/12 10% YoYQ3/12 Spend up Q2/12 Spend up 9% YoYConversion rates relative to device OS by geo and industry—Figure 8 shows that across industries, overalliOS conversion rates were nearly double those of Android. Likewise, across geographies, iOS conversion rates Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12were significantly higher across the board, with overall conversion rates up to 93% higher than Androidconversion rates. Higher conversion when matched with an 18% lower CPCServices [U.S.] Automobile [U.S.] Retail [U.S.] Financial give iOS search traffic a huge edgein ROI with two times the ROI of Android search traffic. Spend up 15% YoY ROI up 50% YoY ROI up 13% YoY Android = 100% Android = 100% 100% CPC 100% = 100% 193% 100% Finance ROI up 21% YoY Android 165% Spend up 9% YoY Spend up 10% YoY CTR UK / Germany Travel CVR 200% USA Retail 199% Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q3/11 Q4/11 Q1/12 Q2/12 % Q3/12 181 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 ROI Other Other Automobile [U.S.] Retail [U.S.] Financial Services [U.S.] 0 100 200 0 100 200 0 100 200 Android = 100% Android = 100%Figure 8—Conversion rates by device OS, geography and industry CPC % 193 Finance Android = 100% 165% CTR UK / Germany TravelFacebook update % 200 199% CVR USA Retail 181%Brands continued to invest in Facebook to drive fan growth, and Facebook continued to show significant increases ROI Other Otherin engagement. Engagement, which is defined as likes, comments, and shares, grew 896% YOY, as shown in 996%Figure 9. We surmise that increased engagement rates result from platform changes (Timeline) made in the last 0 100 100 200 91 0 284 100 200 649% 0 100 200three quarters, use of new acquisition % engagement metrics, and more effective social marketing by brands. % % andIncreases in engagement levels in future quarters would indicate that Facebook is becoming a more valuableadvertising marketing channel than in the past. Q3 2011 Q1 2012 Q3 2012 100% 91% 284% 649% 996% Q3 2011 23% 24% Q1 2012 19% 15% Increase four-fold Q3 2012 from the period 8% prior to the timeline format change. 5% 5% 5% 5%Figure 9—Average brand post engagement Jan Feb Mar Apr May Jun Jul Aug Sept Facebook, January 2012 - September 2012 23% 24% 19% 15% Increase four-fold Digital Index Report Adobe 5 from the period 8% prior to the timeline format change. 5% 5% 5% 5%
  6. 6. Q3 2011 Q1 2012 Q3 2012Mobile users account for nearly one quarter of all Facebook engagement up four-fold from the period prior tothe Timeline format change (see Figure 10). 23% 24% 19% 15% Increase four-fold from the period 8% prior to the timeline format change. 5% 5% 5% 5% Jan Feb Mar Apr May Jun Jul Aug Sept Facebook, January 2012 - September 2012Figure 10—New page likes from mobile usersForecast for Q4 2012–Q1 2013Given the robust growth in spend and the high ROI, we expect search to have a strong retail season. Growthrates of 15%–20% in both U.S. and Europe are likely. The decline in CPC due to the increase in less expensivemobile traffic appears to have bottomed out. CPCs should increase in Q4 due to the seasonality of retail as wellas the impact of Google Shopping transitioning to a paid model. As mobile traffic continues to grow, we expectone in five paid search clicks to originate from a smartphone or tablet. Marketers studying the searchmarketplace by tablets versus smartphones and within smartphones by operating system might find arbitrageopportunities because the iOS user base is more affluent, but the Android user base is larger.ImplicationsThe findings within this report suggest the following implications for how digital marketers andadvertisers optimize digital marketing spend across media channels and devices.• Social engagement is booming. The increase in engagement levels indicates that Facebook is becoming a more valuable advertising marketing channel than in the past. Marketers should capitalize on this trend to include more social marketing in their digital marketing initiatives.• Search, especially on mobile devices, should continue to be a major part of the marketing mix given growth in mobile device use and attractive ROI.• Marketers can drive higher returns by optimizing spend across devices; search spend for iOS devices offers the most attractive opportunities.• Retailers need to account for additional spending on Google Shopping because that free service has just transitioned to a paid model.MethodologyOur analysis of digital marketing and Facebook performance is based on index derived from data captured byAdobe AdLens™ and Adobe Social. The index’s data compromises over 260 billion impressions for 338companies in the automotive, CPG, financial services, media and entertainment, and retail industries andactivity of 70 million fans. Adobe Digital Index Report 6
  7. 7. Definitions Key terms in this report are defined as follows: • Cost per click (CPC)—The amount paid by a marketer per user click on a paid search ad. CPC is determined by an auctioning process and is a good indicator of market conditions. Increases in CPC indicate advertisers are willing to spend more on advertising, and decreases indicate that advertisers are willing to spend less. • Return on investment (ROI)—A measure of profitability based on how much a marketer receives in terms of results compared with how much is invested. It is also known as a measure of efficiency. • Spend share—A measure of profitability based on how much a marketer receives in terms of results compared with how much is invested. It is also known as a measure of efficiency. Appendix Table 1: Spend Share by Search Engine, US Quarter Q2 ’11 Q3’11 Q4 ’11 Q1 ‘12 Q2 ’12 Q3 ‘12 Bing/Yahoo! 19.1 18.7 18.9 20.4 20.1 20.4 Google 80.9 81.3 81.1 79.6 79.9 79.6 About Adobe Digital Index Adobe Digital Index publishes research on digital marketing and other topics of interest to senior marketing and e-commerce executives across industries. Research is based on the analysis of select, anonymous, and aggregated data from over 5,000 companies worldwide that use the Adobe Digital Marketing Suite, powered by Adobe technology and solutions, to obtain actionable data and analysis of activity on their websites. This report was prepared by Kohki Yamaguchi, Sara Miller, Sid Shah, and Tamara Gaffney of Adobe Systems Incorporated. For additional information about this report, contact Adobe Digital Index, at DigIndex@adobe.com. Access more reports like this one for free at www.adobe.com/solutions/digital-marketing/digital-index.html. 1 http://googlecommerce.blogspot.com/2012/10/google-shopping-transition-update-and.html/ 2 “Global Digital Advertising Update Q2 2012,” Adobe Digital Index, July 2012 See “The Impact of Tablet Visitors on Retail Websites,” January 2012; “Global Digital Advertising Update Q1 2012,” April 2012; and “How Tablets Are 3 Catalyzing Brand Website Engagement,” May 2012Adobe Systems Incorporated Adobe, Adobe logo, and Adobe AdLens are either registered trademarks or trademarks of Adobe Systems Incorporated in the United States and/or other countries. iOS is a trademark of Apple Computer, Inc. Android is a trademark of Google, Inc. All other trademarks are the property of their respective owners.345 Park AvenueSan Jose, CA 95110-2704 © 2012 Adobe Systems Incorporated. All rights reserved. Printed in the USA.USAwww.adobe.com 10/12

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