Hello! We’re continuing to review some of the insights from our Global Search Advertising Trends Q1 2013 report. In my first post on the report, I shared how quarter-over-quarter (QoQ) and year-over-year (YoY) Q1, search spend suggests a strong 2013 for paid search. Feel free to download that report or attend our webinar on Tuesday, April 30th – during which I will walk you through the entire report including spend data and provide some additional insights and best practices.
Today, let’s take a deeper look at Key Performance Indicators (KPIs) from the report such as clicks, click-through-rate (CTR), and ad impression volume. For more information regarding the approach that was used to render these numbers, please refer to the methodology section of the report.
Spend was up YoY and so were clicks. Global search advertising budgets rose 15% YoY while clicks grew even faster with a 21% increase from the same quarter in 2012. In my next post, I will share some of the cost-per-click information that shows that advertisers were able to get more clicks for their SEM dollars, but for now, just know that this hike in clicks would seem to be a good sign of a healthy PPC economy.
The biggest increase for any KPI during the first three months of this year was click-through rate. CTR increased a full 62% YoY from 1.04% in Q1 of 2012 to 1.68% in Q1 of 2013. That increase is in line with a 5-quarter trend of rising CTRs that we’ve been tracking for some time. Although the reasons for this efficiency are debateable, I think it’s safe to say that this is a good thing for the entire ecosystem. Engines like it when their PPC ads get clicked, advertisers are able to squeeze more clicks from their keywords, and most importantly, consumers seem to find more ads that are relevant and interesting to click.
While click-through-rate has been climbing, the total number of ad impressions was down 26% YoY. This isn’t new as there’s been 5-quarter decline in ad volume since Q1 of 2012. Although there are probably several different factors that fuel this drop, it’s hard to ignore just how closely the rise of CTR seems to correlate to the decrease in ad impressions.
This is classic, textbook paid search efficiency. As CTR goes up, advertisers need fewer impressions to spend their budgets and reach their click goals. The major search engines incentivize advertisers to run more relevant ads in the form of Quality Score (QS) benefits (lower costs, higher positions) and CTR is a main component of the QS calculation. Thus, falling ad impression volume, when put into context of rising budgets and clicks, doesn’t seem to indicate anything other than paid search programs are getting more efficient.
In my next post, we’ll see how cost-per-click in Q1 compares to previous quarters as well some spend data broken out by region.