Paid Search Advertising Grows in Popularity

Businesses are spending more on paid search advertising, according to a new report, which also finds that—when it comes to advertising performance—Bing gives more bang for the buck than Google.

These are just two key points of an advertising trends study released Thursday by Kenshoo, a digital marketing software company. In the study, the company looked at advertisers’ spending habits, the traffic search engines created and click-through rates these delivered.

“Marketers should closely examine our data, as well as their own campaign benchmarks, to find the best performing areas and those ripe for expansion to meet their goals,” says Aaron Goldman, Kenshoo’s chief marketing officer. “This report identifies a number of specific opportunities, including increasing investment with the Yahoo Bing Network, ramping up Product Listing Ads for Google Shopping and creating mobile campaigns with unique targeting for different devices.”

The findings

According to the study, marketing budgets for paid search advertising increased throughout the year, but companies upped their budgets by 24 percent, year over year, in the third quarter. The increase came even as pay-per-click advertising rates remained pretty much the same.

The report also finds that cost-per-click rates have gone up this year in both the U.S. and the U.K.

“If growth rates remain consistent, cost-per-click rates in the U.K., which are currently at 45 cents, could match the U.S. cost-per-click rate of 48 cents by [the fourth quarter],” the report states.

The study adds that while Google drives more traffic, overall, to businesses than the Yahoo Bing Network, the Yahoo Bing Network is more efficient when it comes to return on ad spending. It had a 29-percent higher click-through rate, encouraging advertisers to spend 10 percent more, quarter-over-quarter, and 35 percent more, year over year.

Not surprisingly, the survey also finds that Google Product Listing Ads—ads needed for merchants to show up in Google Shopping—have become popular with advertisers, and that these outperform search text ads. People who used Google Product Listing Ads saw 68-percent higher click-through rates, 38-percent higher conversion rates and 25-percent higher return on adverting spent, the report finds.

On the mobile front, Kenshoo reports that marketers in the U.S. spent 13 percent of their total paid search marketing budgets on mobile devices, and that mobile phones and tablets accounted for 21 percent of search advertising clicks. However, tablets had an 8.8 percent conversion rate, while phones had less than 1 percent.