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Paid Search Clickthrough Rates Up Year Over Year

Average CPC up for Yahoo!/Bing, down for Google

US companies spend more on search than on any other online ad format. This year, eMarketer predicts, US search ad spending will account for almost half of total online advertising spending.

Findings from online ad management platform provider Marin Software suggest paid search advertisers could see better return on that investment this year than in years past. According to the company, the average US clickthrough rate on Google increased 48% in Q4 2011. Yahoo!/Bing saw a 44% increase during the same timeframe.

Declines in clickthrough rate from Q3 to Q4 2011 are worth noting and can likely be attributed to an influx of paid search advertisers during the busy holiday season. Rising cost per click (CPC) during this time also suggests a greater number of advertisers competing in both engines’ bidding landscapes.

But year over year, the average CPC for Google in the US declined from $1.11 to $1.02. During that time, the average CPC on Yahoo!/Bing in the US increased from $0.78 to $0.85, perhaps also suggesting an increase in paid search advertisers on this engine.

Additional data from Covario offered a more historical and worldwide perspective on average clickthrough rate. The data showed overall increases in clickthrough rate on Google from 2007 to Q1 2011.

Variability in Q1 2011 clickthrough rate between Marin Software and Covario can be attributed to differences in worldwide vs. US performance, as well as calculations that look at the performance of clients’ paid search ads, not all Google paid search ads. Covario’s Yahoo! and Bing clickthrough rates also show positive growth as separate engines up to the time of their merger.

Almost all industries will see their budgets go further this year in light of CPC decreases from Q4 2010 to Q4 2011. Education and finance saw the greatest decreases in average US paid search CPC, at $0.50 and $0.27, respectively, during that period. B2B was the only industry with a year-over-year CPC increase, perhaps suggesting a greater number of B2B companies incorporating paid search into their marketing mix.

Worth highlighting is the distribution of US paid search clicks and impressions across screens. Smartphones and tablets are beginning to eat away at computers’ total share of paid search activity. For Q4 2011, Marin Software found smartphones saw 6% of paid search clicks and 4% of paid search impressions. Tablets were responsible for 4% of clicks and 3% of impressions.

By 2014, eMarketer predicts there will be 133 million smartphone users and 89.5 tablet users in the US. Internet users in the US will reach 251.2 million.

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Check out today’s other article, “Marketers Follow Users to More Social Sites.”

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