The most recent KMG report finds that search engines channel considerable traffic, while increasing competition amongst advertisers has pushed up costs.

On 14 October, KMG released its Digital Marketing Report Q3, which details massive growth in most areas of the paid search sector. KMG compiles data from its own clients, 50 of whom are members of the Internet Retailer Top 500.

Search engines and social networks alike experienced big growth since the third quarter of 2013, demonstrating that it is more important than ever for companies to carefully explore search data.

Paid Search Spending Is up

Compared to last year, advertisers spent far more on marketing with three of the top publishers: Google’s total is up 27%, Bing’s increased 24%, and Facebook outdid both at 30%. For Google, this constitutes an 18% rise in click volume, combined with an 8% boost in CPC.

Bing’s increase was entirely the result of a boom in volume, as its CPC remained steady.

Mobile Commerce Soars

KMG’s report explains how, year on year, mobile commerce and traffic expanded a great deal. Smartphones and tablets now channel 38% of paid and organic traffic, while 42% of visits to social media sites came from mobile devices. However, mobile devices only account for 28% of advertiser spending.

This social figure is 13% higher than for the same quarter last year. Meanwhile, advertisers are catching up on to the importance of mobile as an ad medium, producing a 117% increase year on year.

However, advertisers have clearly not quite mastered the mobile platform: conversions are 66% lower than for desktops. However, new data on the iPhone 6 and iOS 8 suggests that the people who use these new devices convert more than when using older models, representing a burgeoning opportunity worthy of pursuit.

Product Ads See Increase in Both Traffic and Spending

Bing’s ‘Product Ads’ and Google’s ‘Product Listing Ads’ are based on a particular product and include a featured image. After Google’s Product Listing Ads made up 22% of Google’s total search clicks last Q3, that figure rose to 27% this year.

Non-brand product ads on all search engines saw 38% more conversions than text-based ads, yet by contrast, all product ads – both brand and non-brand – converted 25% less than text. Finally, the cost of product ads on both Bing and Google rose by 73%.

Social Traffic Steady Overall, Yet Pinterest’s Rises

The total traffic that all social networks direct to websites increased from a year ago, though only by 0.2%, to a 2.2% share of the total. Facebook still directs an impressive 53% of the traffic, though that figure is down from 60% last year – a drop representing ground lost to Pinterest, which now directs 18% of all social clicks.

Organic and Paid Search

32% of search traffic for Q3 was organic, down from 34% last year, with Google owning 83% of the traffic, Bing taking 8%, and Yahoo holding 7%.

Given the enormous amount that advertisers are spending, they were surely pleased to see that Google’s click-through rates increased by 8%. However, they may begin to look elsewhere, as Bing’s ads saw an impressive 38% increase in clicks.

The share of paid search by device revealed an interesting trend: Smartphone traffic grew from 30 to 38%, while tablet clicks held steady at 18%. These numbers seemingly represent a direct repercussion of the latest smartphones’ increasing screen sizes.

By combining greater clickability with the portability of a phone, these new models have started to render tablets somewhat redundant.

With traffic, spending, and competition all on the rise, brands must pay closer attention than ever to their SEM strategy – or risk falling behind more prudent competitors. You can’t just advertise-and-pray anymore. SEM has become a highly mature market, and will only grow increasingly competitive over time.

Remaining Competitive in a Growing Market

With a more competitive market come higher costs, however, making it critical that companies economise their SEM efforts. Adthena’s sophisticated paid search metrics will analyse your search performance and your competition’s, and this detailed knowledge of industry emphases will empower you to spend only what’s absolutely necessary.

Many clients have already saved thousands of dollars this way while keeping pace with higher-spending competitors.

The desktop market appears fairly saturated, so companies would be wise to focus their optimisation efforts on mobile traffic and its 66% lower rate of conversion, especially as devices and OSs become more ad-friendly.

If this is your priority, Adthena’s data will illustrate how marketing performs for different platforms – desktop and mobile – showing you which points are weakest, so you can optimise your efforts accordingly.

Adthena’s metrics gather massive amounts of data on ad performance in relation to the competition, including traffic volume, chronology, and proportion to other metrics. Such comprehensive data can reveal weaknesses in your own company’s strategy, or in the competition’s, providing a valuable opportunity to either correct or exploit them and start optimising your SEM efforts.

(Main image credit: Jakob Montrasio/Flickr)

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