This document summarizes key performance metrics and industry developments in paid search marketing in Q3 2013. It found that paid search spend, clicks, and click-through rates all increased year-over-year in Q3 according to Performics' aggregate US client base. Mobile search spend and clicks both significantly increased. Product listing ad spend and clicks also grew. It also reviewed trends in social/display advertising, and algorithm updates from Google and Bing.

1. Q3
2013
Benchmarking & Industry
Developments
Paid Search
Mobile Search
Product Listing Ads (PLAs)
Social & Display
Organic Search
@Performics

2. 2
Q32013Overview
MOBILE
SEARCH
Benchmarks:
Spend, Impressions, Clic
ks, CTRs, CPC
Google Enhanced
Campaigns
PRODUCT
LISTING ADS
Benchmarks:
Spend, Clicks, CTRs, CPC
PAID
SEARCH
Benchmarks:
Spend, Clicks &
CTRs, CPCs
Engine Share
Google Estimated
Conversions
SOCIAL &
DISPLAY
Facebook Advertiser
Investment
YouTube Investment
Yahoo! Stream Ads
LinkedIn Sponsored
Updates
ORGANIC
SEARCH
Google Secure Search
Hummingbird
Bing Redesign

3. Paid Search

4. Performics aggregate U.S. client base, all engines, same store
+11.2%
Spend
+9.3%
Clicks
+22.1%
CTRs
+1.8%
CPCs
PaidSearchGrowth:Overview
+17.9%
Spend
+16.0%
Clicks
+6.7%
CTRs
+1.6%
CPCs

5. Spend
 11.2% increase in Y/Y paid
search spend
– Good acceleration from
slower Q2 Y/Y, which
was due to caution
around GEC migration, &
budget preservation for
high volume in Q3 & Q4
(back to school, holiday)
 Spend accelerated each
month in Q3, as
advertisers got more
aggressive with GEC
mobile bid multipliers
Performics aggregate U.S. client base, all engines, same store
+11.2%
Spend
+9.3%
Clicks
+22.1%
CTRs
+1.8%
CPCs
+17.9%
Spend
+16.0%
Clicks
+6.7%
CTRs
+1.6%
CPCs

6. 1. Mobile
– As mobile usage soars, advertisers focus on building compelling mobile
experiences to capture traffic, enabling them invest more in mobile search
– GEC tablet force-in driving increased tablet spend
2. Attribution
– More tools & processes to visualize the total impact of paid search (online &
offline), enabling advertisers to more confidently invest in the channel
3. Omni-channel
– Linking search to all other advertising (TV, OOH, video, display, gaming
consoles) to create a holistic participant experience
6
PaidSearchGrowthStimulatorsQ3

7. Clicks & CTRs
 Although we are seeing
fewer Y/Y impressions
(impressions down 10%
from Q3 2012 to Q3
2013), clicks are still
increasing (9.3%)
– This increases CTRs (22.1%
Y/Y increase)
 Rising CTRs indicate that
paid search advertising is
becoming more
effective, which is also
stimulating spend
Performics aggregate U.S. client base, all engines, same store
+11.2%
Spend
+9.3%
Clicks
+22.1%
CTRs
+1.8%
CPCs
+17.9%
Spend
+16.0%
Clicks
+6.7%
CTRs
+1.6%
CPCs

8. CPCs
 We’ve now seen 4
consecutive quarters of
CPCs rising Y/Y
– Conservative bid multipliers
at the start of GEC (July,
Aug.), pulling down CPCs
– In Sept., Y/Y CPCs
accelerated :
– Advertisers got more
aggressive in GEC
– Sept. was very
competitive for back to
school
Performics aggregate U.S. client base, all engines, same store
+11.2%
Spend
+9.3%
Clicks
+22.1%
CTRs
+1.8%
CPCs
+17.9%
Spend
+16.0%
Clicks
+6.7%
CTRs
+1.6%
CPCs

9.  Bing/Yahoo! spend share has grown from 20% in Q3 2012 to 23% in Q3 2013:
 Increased spend driven by decreasing CPCs (improved ROI):
Bing/Yahoo!GainsonGoogle
Performics aggregate U.S. client base, all engines, same store
Decreasing CPCs
driven by ad
enhancements &
better processes to
boost relevancy
(thus quality score)

10.  Measures clicks on paid search ads on one device that end in
conversions on other devices (or other web browsers)
 More holistic view of conversions enables us to:
– Find incremental conversions; reduce the amount of lost attribution across
devices & browsers
– Better visualize the impact of mobile on conversion (e.g. know when
someone clicks on an ad on mobile, but later converts on desktop) to more
confidently dedicate budget to mobile
 We found 25% more conversions for one retailer
10
GoogleLaunches“EstimatedTotalConversions”
Performics
Estimated Total Conversions
POV

11. Mobile Search

12. MobileSpendSharePeaksinEnhancedCampaigns
Performics aggregate U.S.
client base, Google only
(content and search partners
excluded), Sept. 2013
 Mobile spend share of total paid search rose significantly in Q3 due to tablet
and mobile force-in in Enhanced Campaigns (GEC)
 Pre-GEC (June) v. post-GEC (Sept):
– Total mobile spend share rose from 22.5% in June to 27.1% in Sept.
– Tablet share rose from 13.4% in June to 17.2% in Sept.
– Smartphone (mobile) share rose from 9.0% in June to 9.9% in Sept.
72.9%
Desktop
17.2%
Tablets
9.9%
Smartphones
 Y/Y increases in
mobile spend:
 Total mobile: 59.1%
 Smartphone: 58.6%
 Tablets: 59.4% GEC Migration

13.  GEC tablet force-in led to an 88% increase in tablet impressions from June (pre-GEC) to
Sept. (post-GEC)
– Smartphone (mobile) impressions increased 44% over same period
TabletImpressionsAccelerateinQ3DuetoGEC
Performics aggregate U.S. client base, Google only (content and search partners excluded), Sept. 2013
0
20
40
60
80
100
120
Mobile Impressions
Mobile Tablets
GEC Migration

14.  Mobile (tablets + smartphones) was 37.7% of all paid search clicks in Sept., the second
highest ever after Aug. (39.8%)
MobileClickShareAlsoReachesNewHeights
Performics aggregate U.S. client base, Google only
(content and search partners excluded), Sept. 2013
 YoY increases in
mobile clicks:
 Total mobile: 37.2%
 Smartphone: 34.4%
 Tablets: 40.2%
31.1%
28.5%
32.3% 33.7% 32.4%
34.7% 34.8% 34.3% 35.3% 36.4% 37.7%
39.8%
37.7%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
0
10
20
30
40
50
60
70
Mobile Clicks
Mobile Tablets % Clicks from M + T
GEC Migration

15.  Historically, tablets had the highest CTRs, followed by smartphones (mobile) and desktop
 But, in GEC, increased tablet competition has led to lower tablet CTRs
– Now smartphones enjoy the highest CTRs, followed by tablets and desktop:
TabletClick-ThroughRates(CTRs)DropinGEC
Performics aggregate U.S. client base, Google only (content and search partners excluded), Sept. 2013
GEC Migration

16. AfterGECMigrationDrop,MobileCPCsBounce
BackinSeptember
 Uncertainty at GEC migrations in July
caused advertisers to be
conservative with mobile bid
multipliers, leading to smaller short-
term mobile CPCs increases than
expected
 Mobile CPCs then stabilized in Sept.
as advertisers became more
comfortable with GEC and got more
aggressive with bid multipliers
 Mobile CPCs were 42% of desktop in
June, falling in GEC to 39% in July
and 37% in Aug., and then bouncing
back up to 45% in Sept.
Performics aggregate U.S. client base, Google only (content and search partners excluded), Sept. 2013
0%
10%
20%
30%
40%
50%
3/1/2013 4/1/2013 5/1/2013 6/1/2013 7/1/2013 8/1/2013 9/1/2013
Mobile CPCs (Indexed against Desktop)
Mobile CPC Index

17. Product Listing Ads
(Google Shopping)

18.  PLA spend has risen from 1.4% of text ad spend in Q3 ‘12 to 4.6% of text ad spend in Q3 ’13
 We expect PLA spend and click share to peak during holiday
18
PLASpendShareGrowsinQ3

19.  Although PLAs are becoming richer and more visible, searchers still click
at a similar rate to desktop:
19
PLAClick-ThroughRates(CTRs)MirrorTextAds

20.  PLA CPCs have remained slightly above regular text ad CPCs in Q3
 We expect PLA CPCs to rise in Q4 due to holiday competition
20
PLACPCsRemainSlightlyAboveTextAds

21. Social & Display

22.  Advertiser interest is rising as Facebook has become more direct-
response focused through the addition of:
– Better Tracking: view-through, conversion pixels
– Facebook Ad Exchange (FBX): Advertisers can now better target (e.g. by browsing
history). A user’s recent browsing data is more likely to indicate intent to purchase
than Facebook’s other targeting options (e.g. profile demographics or interests).
– Ads that direct traffic off-site
22
FacebookAdvertiserInvestment

23.  Continuous news stream where
Stream Ads appears between
every 10–15 articles on Yahoo!
Home, News, Travel & Finance
 CPC-based; target based on
DMA, city, state, gender
 Stream Mail runs on top of inbox
 We’re seeing higher ROI than
other contextual ad types
23
Yahoo!StreamAds

24.  Ad (content) appears in news feed
 Focus on relevant, helpful content
 Content is not one-size fits all; it
requires deep understanding of
the users’ wants, needs & barriers
 Leverage LinkedIn’s unique
targeting capabilities (e.g. job
titles, specific companies)
24
LinkedInSponsoredUpdates

25. Organic Search

26.  Google has been encrypting organic searches (keyword: “not provided”)
for logged-in users, but will now encrypt organic searches conducted
even when users aren't logged in
– e.g. advertisers cannot see what organic keyword drove the click to their
sites
 Keyword information will still be passed from paid search ads
 Update makes keyword data from paid search more valuable to inform
organic search optimization, increasing the incentive for advertisers to
take a OneSearch (paid + organic) approach
26
GoogletoEncryptAllOrganicSearchers
Performics
Google Secure Organic Search
POV

27.  Google made an algorithm update (“Hummingbird”) that affects 90%+
of search results
 Unlike Panda and Penguin, Hummingbird focuses less on the ranking
algorithm and more on how queries are understood (conversational
search)
 So far the update hasn’t had much impact
 Future keywords & content should focus more on longer queries and
providing searchers with answers
27
GoogleHummingbirdAlgorithmTakesFlight
Performics
Google Hummingbird
POV

28.  New logo, design & palette
 Bing is also “stepping out of the search box” by integrating further into
Win. 8, Windows Phone, Xbox, Maps, Word & Excel
– Searchers now discover products & services well beyond the traditional
search page
– Search strategies must now extend everywhere to engage participants
(xBox, Siri, Internet-connected TVs, GPS units, operating systems, apps, etc.)
28
NewBingIdentityHighlightsEvolutionofSearch
Performics
Bing Redesign
POV

29. – Brands should claim
listings & pages on sites
that Snapshot pulls
content from (e.g.
Citysearch)
– Ensure all info is accurate
– Build fan bases, create
content, encourage
participation to show
in Sidebar
29
BingEnhancesSidebar&Snapshot
Sidebar (social)
Snapshot (facts)

30.  Shows organic results as the searcher types
 Not impacting paid search keywords
 Shows on fact-based queries (places, people, things)
30
BingRollsOutPageZeroResults

31.  Bing-controlled listing pushes down traditional organic listings
 Shows on queries where Bing is confident in user intent:
31
BingLaunchesPolePositions

32. BLOG.PERFORMICS.COM
SLIDESHARE: PERFORMICS_US
@Performics
Benchmarking & Industry
Developments Q3 2013