Paid Search Trends

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Paid Search Trends
iPROSPECT QUARTERLY REPORT | 2017 Q3
By Jessica Freistat, Director, Paid Search and Michael Kelley, Director, Data & Insights

2iProspect Quarterly Report Paid Search Trends | 2017 Q3
© 2017 IPROSPECT. ALL RIGHTS RESERVED.
Introduction
In a surprising trend, Q3 2017 recorded a quarter over quarter (QoQ) decline in CPC.
This marks a departure from the consistent QoQ CPC increases recorded between
Q2 2016 and Q2 2017. Primary factors that contributed to this Q3 decrease include:
 Mobile: Advertisers continued to allocate a greater percentage
of their budgets to mobile, which has a lower CPC than desktop
on Google.
 Google’s May 2017 Ad Rank update: An analysis across iProspect’s
clients on the impact of this update showed a 4% decrease
in CPC for non-trademark terms.
 CTR Increases: Search CTR increases have been noted across
some advertisers as a result of ongoing testing and refinement
of expanded text ads as well as ongoing audience targeting
adoption and testing, which positively influence ad relevance,
CTR, and Quality Score.
In Q4, CPC is likely to increase during the November/December holiday season as ad-
vertisers who are capitalizing on the peak holiday shopping season drive an increase
in competition.
While iProspect’s Q2 Google AdWords data showed continued increases in CPC, Q3
2017 saw a QoQ decline in CPC, indicating a shift in cost trending. Year over year (YoY)
CPC increases contributed to click declines as advertisers are spending more per click
thus receiving fewer clicks within their budget, but QoQ CPC decreases in Q3 mean
that costs haven’t continued to increase for advertisers this past quarter.

Shopping investment and volume continue to grow in Q3 2017, once again reaching
their highest levels to date. Data showed significant year over year (YoY) declines in
Shopping CTR due to an increased number of impressions served, which was attrib-
utable to several changes in Shopping ad formats on Google. Despite the lower CTR,
Google Shopping Click Share across iProspect’s advertiser set increased 48% QoQ.
For the first time since this report’s inception in 2014, iProspect also analyzed Bing Ads
data across iProspect’s advertiser set. Investment in Bing has been growing steadily
since Q3 2016 and continues to grow, up 22% YoY in Q3 2017.
The following trends and insights are based on an analysis of data from more than
2,500 Google AdWords and Bing Ads accounts. All of these accounts are managed by
iProspect U.S. (though the spend is not confined to U.S. markets), and together they
represent more than 220,000 active campaigns, spanning both Search and Shopping
ad formats.
Shopping investment and volume continue
to grow in Q3 2017, once again reaching
their highest levels to date.

Reviewing Overarching Q3 2017
Trends—A Look at Primary KPIs
GOOGLE: CPC DECREASING. SHOPPING GROWING
In a surprising deviation from its typical trend, Google’s QoQ CPC dropped. This
decrease contrasts sharply with across-the-board YoY CPC increases: 27% overall
for Google, 31% for Search, and 15% for Shopping. CPC was also up YoY across
all devices: desktop up 28%, mobile up 32%, and tablet up 22% YoY. In Q2,
iProspect recorded the highest CPC levels to date, but this trend changed in Q3 with
a QoQ CPC decline of 5%. The overall CPC decline was due to declining Search CPC,
specifically—7% QoQ—whereas Shopping CPC saw a 5% increase QoQ. In terms of
devices, CPC declined QoQ across both desktop (-3%) and mobile (-7%), potentially
influenced by Google’s May 2017 Ad Rank update. Tablet CPC increased 7% QoQ.

Despite consistent spend levels across the advertiser set, iProspect recorded YoY
Google impression and click declines of 9% and 23%, respectively in Q3 2017. As
noted in Q2, significant YoY upward trends in CPC heavily influenced a corresponding
reduction in clicks as advertisers were forced to pay more per click. The end result:
advertisers were driving less traffic for each dollar spent.
Shopping CTR declined 21% YoY due to YoY increases in the number of Shopping ad
units displaying on the search engine results page (SERP). By contrast, CTR across
Search campaigns was up 28% YoY. Desktop Search campaigns saw the highest CTR
increase at 48% YoY, followed by Tablet (+23%) and Mobile (+5%).
Google CPC
hit all-time peak
in Q2 2017, but
declined 5%
quarter over
quarter in Q3.

BING: INVESTMENT UP 22% YEAR OVER YEAR
Across iProspect clients, Bing investment grew an impressive 22% YoY, with Search
investment up 21% and Shopping investment up 37%. Impressions and clicks,
however, were down 6% and 13%, respectively due to a 40% YoY increase in CPC. This
CPC increase was most notable across Search campaigns, which were up 43% YoY
while Shopping campaigns increased only 7% YoY. iProspect speculates this increase
may have been influenced by an increase in competition as advertisers increased in-
vestment on Bing.

CTR increased 7% YoY across Bing Search campaigns while the search engine saw
Shopping campaign CTR decrease substantially by 52% YoY. This drop was influenced
by greater numbers of advertisers adopting Bing Shopping as a standard component
of their overall Search programs.

iProspect expects to see an increase in overall Bing Shopping traffic in Q4 2017
because of typical holiday season activity and also because of Bing’s recent release
of the Shopping Tab.

Taking a Closer Look—
Areas of Special Interest
MOBILE: MOBILE CLICK MAJORITY ON GOOGLE,
DESKTOP CLICK MAJORITY ON BING
Mobile CPC declined 7% QoQ in Q3 2017 after having hit an all-time high in Q2 2017.
Because advertisers aggressively increased their YoY mobile investment to align with
user trends, mobile CPC increased a substantial 32% YoY, but the corresponding in-
crease in SERP competition is now beginning to level off so we are unlikely to see
equally rapid CPC increases moving forward.
Compared to last quarter, the percent-
age of overall clicks coming from mobile
click share on Google rose slightly in
Q3 to 61.9% QoQ (vs. 60% in Q2 2017).
Desktop and tablet click share were both
down at 30.6% and 7.5%, respectively.
Looking at YoY numbers, mobile click
share increased 17% (up from 53% in
Q3 2016), while YoY desktop and tablet
click share both declined, by 15% and
32% respectively.

On Bing, mobile CPC increased only slightly YoY (up 2%) in Q3 2017, but was 18%
higher than Bing desktop CPC in Q3. This differs from Google, where CPC remains
28% lower for mobile than desktop.
The percentage of overall mobile clicks on Bing was 24% in Q3, much lower than
on Google (61.9%). On Bing, desktop still holds the clear majority of clicks at 68%.
Q3 tablet clicks were up slightly YoY at 8%. Mobile click share on Bing increased
to 24%, up from 17% in Q3 2016. iProspect speculates that default search engines
on mobile devices contributed to lower mobile search volume on Bing, and overall
mobile search query volume has grown more rapidly on Google vs. Bing.

SHOPPING: GOOGLE SHOPPING INVESTMENT REACHES
HIGHEST LEVELS ON RECORD
Google Shopping Growth Continues
Google Shopping investment and clicks both continue to rise, and both were the
highest they’ve ever been in Q3 2017. Impressions increased 79% YoY and clicks in-
creased 42% YoY. Google Shopping CPC increased 15% YoY, and further increases are
expected in Q4 2017 due to increased investment and competition during the holiday
season. Google Shopping CPC remains lower than Search CPC and was 17% lower
than Google Search CPC in Q3 2017. Comparatively, Google Shopping CPC was 27%
lower than Search ads in Q2 2017.
Q3 Google Shopping volume continued to grow at a faster rate on mobile than any
other device, with mobile impressions increasing 93% YoY and clicks increasing 54%
YoY. Comparatively, desktop clicks increased 30% and tablet clicks decreased 2% YoY.

Google Shopping CTR Decreases
Overall CTR for Google Shopping decreased 21% YoY, which was a primary driver of
the aggregate CTR decrease noted in the overarching trends for the quarter. As was
the case in Q2, this CTR decrease was primarily due to an increase in the number of ad
units Google shows on the SERP per query, i.e. the number of impressions recorded
for each advertiser. These changes were the result of several SERP updates, including:
 Expansion of the mobile Shopping carousel from 17 to a maximum
of 30 offers per query
 An increase in the number of Shopping ad units on the Desktop SERP
 Addition of a new carousel format on YouTube
 Addition of Shopping ads on Image search
 Addition of Showcase Shopping ads and Shop the Look ads,
which show for broader queries and allow Google to monetize
higher-funnel searches while offering advertisers the ability
to capture more visibility with an attractive Shopping ad unit
In an effort to understand how these SERP updates impacted Shopping CTR, a
careful examination of the effects of the mobile shopping carousel update uncov-
ered several specific insights. Prior to the April update, there were a maximum of 17
potential ad placements on mobile per query. After the update, there are now up to
30 placements available. This expansion of ad space drove an increase in competition
from other advertisers, but it also gave each advertiser the opportunity to show addi-
tional ads per query because each user can show multiple Shopping ads per auction.
Additionally, although the user can only access the additional units by swiping through
the carousel, Google records each ad as an impression whether the user swipes to
view the full set or not.

Since advertisers can show multiple ads per search term in Shopping campaigns,
iProspect analyzed click share across Google Shopping. This analysis made it possi-
ble to determine the number of clicks each individual advertiser received out of the
total available clicks. Since the mobile Shopping carousel update in April and corre-
sponding opportunity to show more ads on mobile, iProspect’s advertiser set saw a
5% increase in overall available mobile impressions and a 48% higher Shopping Click
Share than in Q2 2017.
Bing Shopping Investment Fluctuates Throughout 2017
In contrast to Google, Bing Shopping investment peaked in Q4 2016 and has been
changeable throughout 2017. CPC on Bing Shopping was higher than both Search
and Shopping on Google throughout 2017. Like Google, Bing Shopping investment
is expected to increase during the Q4 2017 holiday season.
Since the mobile Shopping carousel update in April,
iProspect’s advertiser set saw a 5% increase in overall
available mobile impressions and a 48% higher
Shopping Click Share than in Q2 2017.

Verticals
In addition to the overall trends, Q3 performance for three key verticals was analyzed
in depth:
RETAIL: GOOGLE SHOPPING AND BING SHOPPING/SEARCH
ON THE RISE, CPC DECLINES
Shopping continues to grow and reached the highest level recorded in Q3 2017.
Both overall Retail Shopping investment and the percentage of spend allocated to
Shopping saw YoY increases on Google and Bing, with Google Shopping making up
29% of clicks and Bing Shopping accounting for 17% in Q3 2017.
YOY RETAIL CLICK TRENDS BY AD TYPE
AD TYPE/ENGINE Q3 2016 Q3 2017 YOY
Google Shopping 15% 29% 87%
Google Search 85% 71% -16%
Bing Shopping 10% 17% 76%
Bing Search 90% 83% -8%

Overall Retail CPC on Google increased 40% and CTR decreased 21% YoY. Although
CPC was up YoY, CPC decreased QoQ across all devices, with mobile CPC down 9%,
desktop CPC down 4%, and tablet CPC down 2%.
Both Shopping and Search CPC increased 34% YoY. Within Search campaigns, mobile
CPC and desktop increased 65% and 12% respectively, while tablet CPC decreased
5%. Within Shopping campaigns, mobile CPC increased 46% and desktop CPC in-
creased 36% YoY, while tablet CPC remained nearly steady. QoQ, Search CPC on
Google is down 13%.
Retail investment on Bing increased 25% YoY, with a substantial 126% YoY increase
in Bing Shopping campaign investment. Bing Search CPC increased 21% YoY, while
Shopping CPC increased 60% YoY due in part to substantial numbers of advertisers
adopting Bing Shopping. Bing’s Shopping CPC was 40% higher than its Search CPC
in Q3 2017.
AD TYPE DEVICE Q3 CPC YOY
Google Search Desktop 12%
Google Search Mobile 65%
Google Search Tablet -5%
Google Shopping Desktop 36%
Google Shopping Mobile 46%
Google Shopping Tablet -1%

B2B: CPC DECREASES, CTR INCREASES
In Q3 2017, B2B advertisers saw significant YoY decreases in CPC and increases
in CTR. Google CPC decreased 30% while CTR increased 50%. In addition, Google
CPC decreased YoY across all devices: down 32% for desktop, 27% for mobile, and
12% for tablet.
Search trends tend to differ substantially for the B2B vertical vs. other verticals. For
example, the B2B industry has been slower to adopt mobile; they tend to have more
complex conversion processes than other verticals; and, in some cases, these conver-
sion processes are more difficult to complete on a mobile screen. The growth in B2B
traffic and CTR indicates that these brands are starting to embrace mobile by continu-
ing to increase mobile investment and focus efforts on mobile optimization as well
as more effective mobile measurement and attribution. In addition, B2B clients have
also begun to adopt more advanced audience targeting and segmentation strategies
across all devices in order to guide the user more effectively through the complex
conversion journey.
Google YoY CTR increases were also consistent across all devices: up 61% on desk-
top, 33% on mobile, and 16% on tablet. Click share, however, varied by device: mobile
click share increased 10%, whereas desktop and tablet click share decreased 2% and
34% respectively.
The growth in B2B traffic and CTR indicates that
these brands are starting to embrace mobile.

Like Google, B2B also saw significant CPC declines on Bing. YoY, Bing’s overall B2B
CPC decreased 57%, with B2B advertisers seeing CPC decreases of 81% on desktop
and 14% on mobile. Bing B2B CTR was down 11% on desktop, but increased 144%
on mobile as B2B advertisers continue to focus more energy on mobile optimization
initiatives and investment.
As noted in our Q2 trends report, B2B
advertisers should focus on measuring
lead quality and anticipated lifetime
value (LTV) in order to optimize budget
spent while continuing to use more so-
phisticated audience segmentation strat-
egies that help allocate budget toward
the highest-value customer segments.

CPG: CPC AND CTR BOTH UP
Overall, CPG CPC increased 69% YoY in Google and 61% YoY in Bing. CPG also saw
YoY CTR increases: 153% on Google and 31% on Bing. Desktop saw the greatest YoY
CTR increase on Google: up 225%. CPG tablet CTR was also up substantially YoY:
175% on Google. And CPG mobile CTR is up 45% YoY.
Bing saw a similar upward CTR trend with YoY CTR increases of 16% on desktop
and 56% on mobile. Contrary to overarching search trends, QoQ CPG Search CPC
increased—up 3% in Google and 13% in Bing. QoQ, CTR for CPG Search is up 28% in
Google and 4% in Bing.
YoY CPG Impression volume was down across Google and Bing, partially due
to increasing investment in Amazon. Amazon Marketing Services (AMS), hosted on
amazon.com, launched in 2012 and operates in an auction system very similar to
Google and Bing.

Predicting What’s Next in 2017
As Q4 approaches, the holiday season and the biggest shopping season of the
year inches closer. This year, Retail sales are expected to increase 3.1% during the
core shopping months of November and December, and Ecommerce sales are
projected to increase 16.6%—largely driven by mobile. Advertisers should be well into
campaign planning for this holiday season, and many Retailers have already launched
their 2017 holiday campaigns.
In order to win in Paid Search, advertisers must capitalize on the many opportunities
available to them. Specific opportunities to keep in mind for this holiday season
include:
 Support key products in
both Search and Shopping
on Google and Bing
 Leverage remarketing lists
specific to holiday shoppers
 Build remarketing lists ahead
of time to capture intended
users
 Take advantage of existing
CRM data to re-engage cus-
tomers who have purchased
during past holiday seasons
 Build Similar Audiences to
create lookalike user lists off
remarketing lists
 Build in-market audiences
for search to find new
customers who are ready
to buy (available now in Bing)
 Use ad customizers to create
highly targeted messaging
for specific audiences and/
or devices, and to create a
countdown feature for key
promotions or to lead into
Black Friday to create a sense
of urgency for customers and
entice them to purchase
 Deploy Dynamic Search Ads
to match specific long-tail
search queries
 Activate location extensions,
call extensions, and local
inventory ads to drive
customers in-store
 Consider messaging to
self-lifters and encourage
them to “treat themselves”
 Perform a health check of
your product feed to ensure
up-to-date pricing and
availability information,
flesh out titles and product
descriptions, and verify that
all products have the correct
product identifiers (such
as GTINs)

 Consider using location-based
bidding strategies around
brick and mortar locations
 Use all relevant ad extensions
to maximize the impact of ads
and take up more real estate
on the SERP
 Consider advertising
opportunities with
Google Express
 Ensure you have a compre-
hensive budget flighting
and monitoring plan in place,
and are aware of Google’s
recent budget policy update
 Consider ways to unite
online and in-store experi-
ences throughout the holiday
season (36% of consumers
will research products and
compare prices online while
shopping in store)
 Explore advertising
opportunities on Amazon
(more than half of all users
start their product purchases
on Amazon, and 9 in 10
consumers will check
Amazon even if they find
a product they want on
another Retailer’s site)
Additionally, advertisers should consider consumers’ increasing adoption of voice
search this season. This year, virtual assistants and voice search are expected to play
a bigger role in the research phase of holiday purchases. According to an April 2017
Toluna survey, two thirds (67%) of virtual assistant users in the U.S. said they use the
devices for shopping and price comparisons. In order to optimize holiday paid search
campaigns for voice, advertisers should include longer, more conversational, ques-
tion-based keywords including questions such as who, what, when, where, why, and
how, and qualifying phrases such as near me.
Lastly, according to the National Retail Federation, 54% of consumers will begin re-
searching holiday purchases in October (or earlier). Although conversions might not
pick up until closer to the holidays, it’s important to be present when customers start
their research. So, if your holiday campaigns are not yet live, time is of the essence in
order to be in the consideration set of these early shoppers. Happy Holidays!
ABOUT THE DATA
 Based on Google
AdWords and Bing
Ads data
 Includes Google Search,
Google Shopping, Bing
Search, Bing Shopping
 Does not include YouTube
or the Google Display
Network

About the Authors
JESSICA FREISTAT | DIRECTOR, PAID SEARCH
Jessica oversees all Paid Search teams in the Boston office and is responsible for the
paid search executional excellence, innovation, and account strategy for clients ser-
viced out of Boston. A passionate marketer with over 7+ years of digital experience,
Jessica thrives on driving business performance while making meaningful connec-
tions between brands and consumers. Since joining iProspect in 2010, Jessica has
worked in multiple channels, across Fortune 500 clients and various verticals including
Retail, B2B, Healthcare, Travel, and Education.
MICHAEL KELLEY | DIRECTOR, DATA & INSIGHTS
Michael works directly with both the iProspect account teams and clients to deliver
analytics services that include Measurement Strategy, Attribution, Forecasting, and
Reporting & Data Visualization support. Michael joined iProspect in 2010, following
his departure from a PhD program at the University of Chicago and has since offered
his expertise and insights to various Fortune 500 clients across the Retail, Luxury,
CPG, and Travel industries.
Additional contributors include Jessica Dearien, VP, Head of Paid Search and
Andrew Ford, Director of Data Science.

About iProspect
At iProspect, we transform our clients’ businesses by connecting brands with people.
Leveraging our suite of services, smart technology, extensive global footprint, and the
industry’s best specialists, we provide best-in-class performance strategies to get you
the results your business needs.
iProspect is the first truly global digital marketing agency, with 4,200+ employees
in 91 offices across 55 countries. A trusted partner with an in-depth understanding
of consumer behavior, iProspect reshapes brand strategies to meet the fast-paced
demands of the convergent world with a focus on exceeding the client’s business
objectives.
Our global reach, in-depth knowledge of diverse local markets, and expertise produce
award-winning, performance-based marketing strategies for leading brands such as
General Motors, adidas, T-Mobile, Hilton, Sunglass Hut, Microsoft, and many others.
iProspect has been named the “Best Agency for Performance Marketing” by iMedia
for 3 years in a row, the 2015 MediaPost Search Agency of the Year and iMedia’s Best
Agency for Search.
For more information, visit www.iProspect.com or follow us on Twitter @iProspect.

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