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Inbound Marketing Blog

The State of Paid Search Marketing in 2013

12:55 PM on June 3, 2013 by Julien Renaud

Google AdWords PPC ads

In this nod to the good work of our inbound marketing partners HubSpot, we've collected some of the latest statistics concerning paid search marketing, known commonly as Pay-Per-Click (PPC), to make some predictions about its future in 2013 and beyond.

A Crash Course in PPC

PPC is perhaps one of the best known but least understood forms of internet advertising. In short, search engines allow advertisers to bid against each other for prominent positions in search results for certain keywords. These results are different from the organic, unpaid results, so named because they occur relatively ‘naturally’ – if you ignore Search Engine Optimisation (SEO).

Providing you choose the right keywords, bid the right amount and manage your campaign correctly, it’s an efficient way to increase your search engine visibility and drive clicks to your landing pages.

Common PPC platforms include Google AdWords – arguably the most popular purely because Google is the number one search engine – and Bing Ads. They all work in more or less the same way with bids based on how much an advertiser is willing to pay per click (Cost Per Click, CPC) or thousand impressions (Cost Per Mille, CPM). Anyone that has ever set up a ‘traditional’ ad on Facebook or LinkedIn will be familiar with this concept, and vice versa – click here for a guide on how to do it on LinkedIn.

8 Interesting PPC Statistics

  • CPC – telling us how much advertisers are paying for clicks, which generally increases as PPC uptake rises – rose 7% in Q1 against the previous quarter and 23% year-on-year. [Covario, 2013]
  • CTR – a measure of how many people that view an ad actually go on to click it – for ads paid to hold the top position, more than doubled from an average of 4.8% in 2011 to 11.1% in 2012. [SearchLaboratory.com, 2013]
  • A 2012 survey of 1,915 marketers showed that 48% use PPC in their online campaigns. 32% of those said it was “very effective”, while a further 56% marked it as “somewhat effective”. [B2BLeadBlog.com / MarketingSherpa, 2012]

However...

  • Only 6% of Google and Bing users click on a paid search result, compared to the 94% that go for the organic, unpaid results. This is based on a sample of 1.4 billion searches by 28 million UK users in 2011. [GroupM UK and Nielsen / Econsultancy, 2012] 

But...

And...

  • 45.5% of Google Search users can’t identify paid results if not clearly listed in the sidebar on the right-hand side of the page. [WordStream / MarketingProfs, 2012]

What Does it All Mean?

From the statistics we see that while organic search remains as ever king, driving the overwhelming majority of traffic to websites (94% organic vs. 6% PPC), the decline in the use of PPC by advertisers that we saw in 2011 is reversing or has reversed already.

Let’s not forget, Google alone fields 100 billion search queries per month – or 1.2 trillion per year – an announcement it made in August last year. That’s not quite an indicator of how much traffic is generated, but it’s safe to assume that each search drove at least one click, equating to 6 billion visits per month.

It would also seem that the small percentage of search users that actually click on paid ads is increasing, tracked closely by how much advertisers are spending per click (this of course varies between campaigns and for different keywords). In March this year, SearchEngineLand.com declared an end to declining CPC when reporting on a paper from Covario – confidence in PPC is clearly on the up again.

Why the bucked trend? Apparently it’s all to do with changes made to how paid results are displayed – on Google, specifically. Gone are the blue-boxed, “Sponsored Links”; with us now are pale yellow boxes with results that look very similar to their organic cousins. Also, it is now possible to include preview text, social stats and sitelinks, which along with a clever ad title will make the paid result look nearly identical to an organic one. This goes a long way to explaining the last statistic in the above round-up – the 45% of users who just can’t tell the difference any more.

Further, the statistic that reveals that 64% of PPC traffic is generated for search terms of "high commercial intent" i.e. the intent of a search user to buy something online, shows that there is some inclination towards PPC in such instances. Why this is exactly is hard to say – it could be that Google has given advertisers more options for displaying information to grab the attention of consumers – such as discount offers and eye-catching prices. It could also be that the 54.5% of search users that do recognise paid results understand that they often lead to landing pages with attractive offers.

Could it be that internet marketers have improved their tactics to the extent where consumers now recognise a higher quality of destination page from paid links compared to organic? How many times have we scrolled past the major retailers like Amazon, and the Wikipedia entries, and clicked on an organic result only to land at a poorly designed or irrelevant website, or a spam one that's been cleverly SEO'd? Finally, PPC ads are often used by companies which can't compete with the usual major players on SEO alone for particular products, therefore providing some consumer choice in the PPC realm. We see evidence of this in the main picture of this article – for the search term "swivel chair" the organic results are dominated by Ikea and Wikipedia thanks to SEO, while AdWords shows us links to Officefurnitureonline.co.uk and Dwell.co.uk.

In Conclusion: Looking Forward in 2013

Whether or not users will become wise to the yellow sponsored ads remains to be seen, but it seems likely that PPC will increasingly blend itself into organic as Google strives to keep it fresh and attractive to advertisers.

Add to the fray a new form of PPC that emerged last year – product listing ads (PLA). So far we've only written about text ads, but in 2012 Google introduced product listings with images (see picture) and they've already caught up with text-only PPC for CPC spend. Bing is following suit by releasing its own paid product listings this year. This report from SearchEngineLand.com in April – AdWords Product Listing Ad CPCs Close In On Text Ads – explains the numbers in some depth.

A Google PPC Product Listing Ad or PLA

 

 

 

 

 

 

 

 

 

 

 

All the signs point to PPC as a form of internet advertising with plenty of life left in it. However, the overriding advice is to seek the advice of PPC / Search Engine Marketing (SEM) professionals who will help you decide whether it’s right for your campaign, bid for keywords on your behalf and set up all the technical aspects.

Read about two PPC successes and one unresounding failure in Google AdWords: the Good, the Great and the Absolutely Terrible »

Topics: PPC, Get found, Google

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