Q1 Benchmarks and Trends from Performics: clicks, spends, CPCs, CTRs in paid search, mobile paid search, product listing ads (PLAs), social and display

1. Benchmarking Report
Q1
Benchmarks & Industry
Developments:
Paid Search
Mobile Search
Product Listing Ads (PLAs)
2013
Social & Display
@Performics

2. Q1 2013 Overview
PAID MOBILE PRODUCT SOCIAL &
SEARCH SEARCH LISTING ADS DISPLAY
Benchmarks: Spend, Benchmarks: Spend, Benchmarks: Spend, Facebook Advertiser
Clicks, CPC, CTR Impressions, Clicks, Impressions, Clicks, CTRs, Investment
CTRs, CPC CPC
Engine Share Facebook & Atlas
Google Enhanced Google’s Commerce
Campaigns Strategy Graph Search
Google & Channel News Feed Update
Intelligence
Twitter API
2

3. Paid Search

4. Paid Search Growth: Overview
+12.4% -38.9%
Spend Spend
+10.1% -27.7%
Clicks Clicks
+2.1% -15.5%
CPCs CPCs
+25.0% +8.9%
CTRs CTRs
Performics aggregate U.S. client base, all engines, same store

5. Spend
 We saw similar Y/Y spend
growth as last quarter
+12.4% -38.9% (12.3%)
Spend Spend  Q/Q spend is down
coming out of holiday
 Drivers of Y/Y spend
+10.1% -27.7% growth:
Clicks Clicks – Strong Jan. (post-holiday
promos)
– Increased 2013 mobile
+2.1% -15.5% investments
CPCs CPCs – More data & tools for faster,
more informed budget-
optimization decisions
+25.0% +8.9% across channels (online &
CTRs CTRs offline)
Performics aggregate U.S. client base, all engines, same store

6. Clicks
 Similar Y/Y click growth as
last quarter (9.5%)
+12.4% -38.9%  Q/Q clicks down coming
Spend Spend out of holiday
 Drivers of Y/Y click growth:
– Spend increases
+10.1% -27.7% – A richer search page that
Clicks Clicks drives more clicks (e.g.
Video in Ads, Image Ads,
Google Shopping (PLAs),
+2.1% -15.5% Social Integration (G+
Endorsements in Ads))
CPCs CPCs
– High mobile click-through
+25.0% +8.9%
CTRs CTRs
Performics aggregate U.S. client base, all engines, same store

7. CPCs
 After CPCs fell YoY for the
first 3 quarters of 2012,
+12.4% -38.9% we’ve now seen 2
Spend Spend
consecutive quarters of
CPCs rising YoY
+10.1% -27.7%  Q1 CPCs were driven by
Clicks Clicks
post-holiday promos in
Jan.
+2.1% -15.5% – CPCs may fall in Q2 as it’s
CPCs CPCs not the most competitive
time for retailers
+25.0% +8.9% – However, as Enhanced
Campaigns roll out
CTRs CTRs (summer) CPCs could rise
Performics aggregate U.S. client base, all engines, same store

8. CTRs
 Drivers of CTR lifts:
– High smartphone & tablet
+12.4% -38.9% click-through
– Tablets driving highest
Spend Spend CTRs of all devices
– Fewer YoY impressions for
some of our major retailer
+10.1% -27.7% clients
Clicks Clicks
+2.1% -15.5%
CPCs CPCs
+25.0% +8.9%
CTRs CTRs
Performics aggregate U.S. client base, all engines, same store

9. Bing/Yahoo! Gains Share YoY
 Bing/Yahoo!’s share of overall paid search
clicks has grown from 15.3% in Q1 2012
to 22.4% in Q1 2013
 Spend share has grown from 19.2% to 22.7%
 This is due to a decrease in Bing/Yahoo! CPCs
(thus driving better ROI), triggered by
relevancy levers like:
– Sitelinks
– Improvement to organization around match types
– Increased emphasis on negative keywords
Performics aggregate U.S. client base, all engines, same store9

10. Mobile Search

11. Mobile Search Spend Share Holds Steady
 Mobile (tablets + smartphones) was 22.3% of total paid search spend in Mar.
 Advertisers are dedicating more budget to mobile to engage participants, 77.7%
who are increasingly using mobile Desktop
9.1%
Tablets
 YoY increases in
mobile spend:
 Total mobile: 52.1% 13.2%
 Smartphone: 25.6% Smartphones
 Tablets :77.3%
Performics aggregate U.S. client base, Google only
(content and search partners excluded), March 2013

12. Mobile Usage Accelerates In 2013, Driven by Tablets
 Mobile (tablets + smartphones) was 31.8% of all search impressions in Mar.,
the second highest ever after Feb. (32.4%) 67.2%
 Increases simply due to mobile usage, especially a high YoY tablet Desktop
impression increase (115%)
18.9%
Tablets
 YoY increases in
mobile impressions:
 Total mobile: 77.3% 13.9%
 Smartphone: 54.0% Smartphones
 Tablets :115.0%
Performics aggregate U.S. client base, Google only
(content and search partners excluded), March 2013

13. Mobile Click Share Reaches New Heights
 Mobile (tablets + smartphones) was 35.8% of all paid search clicks in Mar.,
the second highest ever after Feb. (35.9%) 64.2%
 Mobile click share growth is due to increased mobile spend Desktop
18.5%
Tablets
 YoY increases in
mobile clicks:
 Total mobile: 46.8% 17.3%
 Smartphone: 23.9% Smartphones
 Tablets :82.7%
Performics aggregate U.S. client base, Google only
(content and search partners excluded), March 2013

14. Mobile Still Driving Better Click-Through
 Tablets continue to enjoy the highest CTRs, followed by smartphones,
then desktop
14

15. The Mobile CPC Gap Widens
 Since holiday, we’ve seen the mobile CPC gap widen. In March:
– Tablet CPCs were 63% of desktop CPCs (they were around 80% of desktop CPCs in Nov. & Dec.)
– Smartphone CPCs were 40% of desktop CPCs
– Smartphones have lower CPCs because advertisers can generate high quality scores through relevancy factors
that increase click-through (like location targeting & click-to-call)
 Enhanced Campaigns
(summer) may erase
the tablet gap
15

16. Google Enhanced Campaigns: Search by Intent
Because participants think of devices as fluidly connected, AdWords will now be designed to manage
hybrid desktop and mobile campaigns per context (intent), not per device.
Time: 8:30AM, Location: Manhattan, Device: Phone
With Google Enhanced Campaigns, marketers can
deliver search ads based on user intent. What intent
does a user have when he searches for “coffee?”
Well, that depends on where he is, what time it is and
what device he’s on. He may want a coffee shop or
home coffee delivery. Enhanced Campaigns enable
marketers to make cross-device, automated
16
inferences based on participant data , at scale
Time: 9:30PM, Location: Manhattan, Device: Laptop

17. Google Enhanced Campaigns: CPC Impact
 We’re not yet seeing the impact of Enhanced Campaigns on CPCs, as the large majority of
our advertisers will wait to migrate until summer (now July 22nd forced migration date)
 It’s possible, however, that CPCs may rise:
TABLETS SMARTPHONES
• Tablets will roll into desktop •Google will opt all campaigns into
smartphones (however, advertisers can
• Tablets are 18.5% of paid search clicks, at effectively opt out by setting mobile bid
63% of desktop CPCs multipliers at -100%)
Tablet & desktop CPCs will blend together Smartphones are 17.3% of paid search clicks,
(weighted) as Enhanced Campaigns launch, at 40% of desktop CPCs
but advertisers may still compete just as hard
on desktop, thus erasing any prior tablet CPC By increasing competition on smartphones,
efficiencies over time Google may pull up smartphone CPCs
17

18. Product Listing Ads
(Google Shopping)

19. Google Product Listing Ads (PLAs) Overview
+58% -74%
Spend Spend
+68% -38%
Impressions Impressions
+160% -37%
Clicks Clicks
-39% -59%
CPCs CPCs
+55% 1%
CTRs CTRs
Performics aggregate U.S. client base, Google only, same store

20. Spend
 A big drop in CPCs coming
out of holiday resulted in
+58% -74% drops in spend
Spend Spend  Q1 spend was 1.5% of
paid search budgets in Q1
+68% -38% vs. 3.6% in Q4
Impressions Impressions
 The same volume of
+160% -37% impressions & clicks were
Clicks Clicks available in Q4 & Q1, but
advertisers either:
-39% -59% – Did not carry specific Q4
CPCs CPCs PLA budgets into Q1 or
– Q4 PLA spend came out of
+55% 1% holiday war chests. Now
CTRs CTRs advertisers need time to
test PLAs to justify budgets.
Performics aggregate U.S. client base, Google only, same store

21. Impressions & Clicks
 PLA impressions & clicks
as a % of overall paid
+58% -74% search impressions &
Spend Spend clicks were similar in Q4 &
Q1 (3% to 4%)
+68% -38%
Impressions Impressions
+160% -37%
Clicks Clicks
-39% -59%
CPCs CPCs
+55% 1%
CTRs CTRs
Performics aggregate U.S. client base, Google only, same store

22. CPCs
 PLA CPCs dropped
significantly after holiday
+58% -74% – In Q4, PLAs were roughly in
Spend Spend line with regular paid
search CPCs, but then fell to
+68% -38% be just 45% of regular CPCs
Impressions Impressions in Q1
+160% -37%  PLA CPCs are lower than
Clicks Clicks regular CPCs because they
don’t convert as well
-39% -59% – Searchers browse/research
CPCs CPCs by clicking on multiple PLAs,
but only buy from one
+55% 1% – Return on ad spend is about
CTRs CTRs half as compared to regular
paid search
Performics aggregate U.S. client base, Google only, same store

23. CTRs
 PLA CTRs are slightly
higher than regular text ad
+58% -74% CTRs:
Spend Spend  2% higher in Q1
+68% -38%
Impressions Impressions
+160% -37%
Clicks Clicks
-39% -59%
CPCs CPCs
+55% 1%
CTRs CTRs
Performics aggregate U.S. client base, Google only, same store

24. Google’s Commerce Strategy v. Amazon
 Google has been focused on building vertical
search engines, or “apps,” within the search
page (Google Shopping (PLAs), Hotels, Flights)
– At Performics, we’re calling this trend
Engine App-ification:
– Engine App-ification is Google’s
response to the fact that participants
use vertical sites for vertical results
– According to Forrester, 30% of
shoppers now start their searches on
Amazon; only 13% start their
searches on Google
24

25. Google Channel Intelligence (CI) Acquisition
 In Feb., Google announced that it had agreed to acquire Channel Intelligence
 The CI purchase is the next step in Google’s commerce plan
 CI will bolster Google Shopping (PLAs), which will only become more important
to advertisers as Google seeks to build a Shopping catalog that can compete
with Amazon
 In this new landscape, where shopping and search are one, retailers must have
an integrated shopping feeds-search experience
Full Performics POV 25

26. Social & Display

27. Facebook Advertiser Investment
 Facebook’s new products & tools have enabled our clients
to invest more:
– View-through Tracking: We can now quantify leads & sales (not just fans gained),
enabling advertisers to invest more direct-response dollars
– 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).
– Atlas, Graph Search & the new News Feed may further spur advertiser investment
throughout the rest of 2013
27

28. Breaking From the “Walled Garden”
 In Feb., Facebook announced that it agreed to acquire the Atlas Advertiser Suite
from Microsoft
 Facebook has been a self-contained channel (“walled garden”); data derived
from Facebook’s users could only be used to optimize ads on Facebook
 With Atlas, Facebook instantly becomes a cross-web network, with all of Atlas’s
publisher relationships in place
 Atlas will better enable advertisers to leverage Facebook’s massive participant
dataset to serve ads across the web
Full Performics POV 28

29. Facebook Graph Search & The Human Algorithm
 People are moving beyond traditional engines to places like TripAdvisor or Quora to get
search results influenced by friends. Performics calls this The Human Algorithm.
– Graph Search uses social signals to rank results
 Graph Search launched in Jan. & search volume is still low; but once it takes off, it will be a
key consideration for brands
– Brands must used paid & owned media to spur creation of earned media to rank in Graph Search
– Search marketers must think less about pleasing algorithms and more about pleasing participants
Full Performics POV 29

30. The New News Feed
 Richer content, with photos at the center
 Easier for users to surface the most relevant content
– Therefore, advertisers must produce even richer content to achieve visibility
 Same experience across desktop & mobile, enabling advertisers to easily create
consistent experiences
across devices
 Potential for new
advertiser opportunities
(e.g. new units or new
targeting capabilities)
Full Performics POV 30

31. A New Revenue Source for Twitter
 In Feb., Twitter released its new API (it will charge advertisers to connect)
 By allowing companies to build on its API, Twitter will more effectively compete
with Facebook, which sees 60% of its ad revenue come through its API
 The API will allow advertisers to measure, optimize, and promote their content
immediately as events unfold
 As third-party partners build on the API, marketers will find greater ease of use
and access to Twitter’s products–social listening, content development, paid
promotion
Full Performics POV 31

32. Benchmarking Report
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