• http://www.kevinlee.net/ Kevin Lee

    These numbers seem wrong. 61% growth in spend driven exclusively by an increase in impressions? Large advertisers only?

  • Jason Anderson

    Also have some questions about the data. If impressions rose 61% YOY and clicks only went up 41% then how could CTR have increased? If CTR remained flat then clicks would also have gone up 61% which it apparently didn’t.

  • http://blog.efrontier.com sidshah

    Hi Matt,
    Either I am understanding these numbers wrong or basic numbers are not adding up.
    Ad Spend= CPC * Clicks
    If spend is up 61%, clicks is up 41% then CPC has to be up by 1.61/1.41 -1 = 14%.

    That number is roughly inline with what most industry vets are seeing, so I am not surprised that you have the same number.

    Jason, has rightly pointed out an issue with the CTRs too.

    In my experience, these issues could arise when
    (a) Your sample client sets are different for each metric
    (b) You use a median/mean value for CTR as against taking total Clicks by total impressions. You can’t take an average CTR as that “unweights” the data. In other words
    sum( clicks)/ sum ( impressions) is the right way to do it as against taking the average CTR (that would be the average of averages).
    (c) The 61% growth seems highly unlikely. All the data suggests that core impressions are growing 15-20% a year. So even with a CPC growth of 10-15% you are looking at 30-35% growth for ad spend.. and thats TOPS.

    Let me know if you need any help/input from me.

    Regards
    Sid

  • Matt Lawson

    Kevin — You are correct, our sample size is large advertisers only. We were surprised by the skew as well. It would appear that large advertisers are growing their budgets at a rate that is much faster than the industry overall.

  • Matt Lawson

    Jason — Thanks for pointing this out, in the original graph we accidentally juxtaposed the metrics for impressions and clicks. With the help of SEL, we were able to repost the graph with the correct numbers. Nice catch, and sorry for any confusion!

  • http://www.directresponse.net Dave

    Very interesting to see the consistency of CPC even with the increase in CTR. It seems the down economy has a reverse effect on ad spending and impressions.

    The internet is a large source of potential advertising space. With this increase in paid search marketing but consistency in CPC over the last year, can we assume this to be true for following years? Or will online retail space become a game of supply and demand?

    Also, to touch on your wonderful point about benchmarking your ad spending growth against your competitions, you should also use an intra-organizational ad audit. At times, the slightest miscue of wording or eye-sore can hinder your CTR.

    For example, http://www.abtests.com shows the difference on conversion rates due to the slightest change in an ad. It is always important to analyze your failures.