A new study suggests that Google Instant Search has already had a positive impact on search advertising, benefiting advertisers through higher impressions and clicks, and adding to Google’s bottom line in the process.
Marin Software, a company whose search marketing products are used to manage more than $1.3 billion in annual search spending, studied the impact of Google Instant on “a few hundred” of its clients, tracking statistics for the two weeks before and after Instant’s September 8th launch.
The results? Marin says ad impressions increased more than 9%, clicks increased more than 5%, and advertisers spent almost 2% more post-Instant.
A little bit of math reveals that the reported 2% increase in costs means about an extra $5 million per week in Google’s pocket. Here’s how:
- Google reported $3.5 billion in US revenue in Q3 of this year. ($7.29 billion overall revenue, minus $3.77 billion revenue from outside the US) Let’s use just the US revenue since Instant rolled out more slowly in other countries.
- Google’s revenue from AdWords has been estimated over the years at anywhere from 90% to 98% of the company’s overall revenue. Let’s use 95% for our purposes.
- If 95% of the company’s revenue comes from AdWords, then about $3.3 billion of the $3.5 billion US revenue was from AdWords in Q3.
- There are 13 weeks in a quarter, so that means Google makes about $256 million per week from AdWords.
- Marin says spending was up about 2% in the first two weeks after Instant launched, which means Google pocketed about $10 million in that time frame — about $5.2 million per week.
That may not seem like much for a company with billions in overall revenue and, in fact, during its earnings call a couple weeks ago, Google VP Jonathan Rosenberg reportedly called the company’s revenue increase from Instant “minimal.” But minimal or not, it’s noteworthy to have one agency’s specific data on how Instant has impacted paid search for both advertisers and Google itself. And keep in mind that this is US revenue only, which, in Q3, was less than 50% of Google’s overall revenue.
We should note that a WSJ article about this study includes one voice of dissent from a search marketing agency that says its own data doesn’t show much change in advertiser costs after Google Instant.