I was talking to Lehmbeck about mobile search trends and what kinds of consumer response he was seeing to various campaigns. Lehmbeck gave me some unpublished, internal data that I’m now sharing in this post. He said that mobile paid search “looks like much like search advertising did in 2001.”

15 to 25 Percent Mobile Paid Search Traffic

Between 15 percent and 25 percent of paid search traffic is now coming from mobile devices according to Lehmbeck. He adds however, “In local-heavy categories, such as dining, auto services and entertainment this number jumps to 50 percent or more.” He says that with the rise of smartphones “consumer engagement [with mobile search] has gone through the roof.”

Lehmbeck points out that online-only retailers are also starting to use mobile to nab in-store shoppers. “As mobile queries grow and these brands start to create highly optimized mobile experiences, this trend will only continue.” Lehmbeck told me that traffic to e-commerce sites via mobile is somewhat lower than the average (5 percent to 15 percent) but that some e-commerce sellers are seeing a “great ROAS” (return on ad spent).

Much “More Attuned to Location” in Ad Copy

Mobile consumers are “much more attuned to location in ad copy” than online search users according to Lehmbeck. “When a user searches with implied local intent, ads that leverage geographic indication tend to perform better.” Searches like “garden supplies” or “furniture store” are in this category.

Explained Lehmbeck, “We have seen some very strong results for ads that reference location or local offers, especially those that do it in an intelligent way (e.g. “Your Garden Superstore – Take 20% Off in Our Los Angeles Locations This Weekend” or “Locate Your New Sofa – Over 15 Furniture Galleries in Los Angeles to Serve You”).” These ads see 50 percent greater engagement than ads do not indicate where to buy or what specific offers are available in their area.”

Offline Conversions Boost Sales 5 to 10X

I’ve written in the past about the offline impact of paid search. It’s rarely tracked and so the true ROI of many campaigns is probably quite a bit higher than what is being calculated. Lehmbeck told me, “In some rare but very interesting cases [paid search marketers] are tracking it down to the offer level in conjunction with our platform and they have seen 5 – 10X sales when accounting for in-store conversions.”

Lembeck counsels marketers to “build out better mobile experiences and get a deeper sense of what the right metrics are for understanding the true ROI of mobile ad spend.” Indeed, recent data from Marin Software showed higher CTRs for smartphones but much lower conversions than for PC search campaigns. However that’s likely because mobile search conversions weren’t being tracked offline.

DataPop CEO Jason Lehmbeck will be presenting on the iConvert panel at SMX Advanced in Seattle next month.

Chitika “looked at hundreds of millions of impressions between April 8 and 14 and broke down traffic depending on operating system, search traffic, and the type of search query.” The company also broke out local searches (often inferred from the query category).

These data don’t measure activity within or involving apps in any way.

Chitika reported that 54 percent of browser-based web traffic from iOS was being driven via search (Google, Bing, Yahoo, etc.). Chitika didn’t report the breakdown of that traffic by search engine and told me that would require an additional analysis. However other data suggest that Google represents about 95 percent of mobile search traffic coming from browsers.

The data argue that iOS browser activity is more “search-centric” than usage behavior on PCs (Mac or Windows). This is also somewhat counter-intuitive given than search is generally easier to use on a PC than on a mobile device.

In terms of local search, the directional relationship among iOS, Android and Windows is roughly the same as in general search chart. However Mac and Linux-based searches reverse positions in the local search data chart. It’s curious and Chitika didn’t really have an explanation for the phenomenon. I asked whether there could have been an error and I was told essentially “no.”

Chitika is saying that 36 percent of search query volume coming from iOS devices has a local intent. This compares to Google’s 40 percent figure for mobile. In contrast, 28 percent of Android search traffic carries a local intent according to Chitika. Figuring out why is an interesting exercise.

Why would iOS users be doing more local searches than Android users? That’s a version of the larger question about why iOS users might be doing more searches generally than Android users? (Once again, these data don’t reflect or measure activity in apps.)

One partial explanation might be that iOS includes iPads, where there is a lot of search activity. But that doesn’t fully explain these findings.

This morning Slingshot SEO is releasing a fascinating report (registration required) that also argues marketers are placing too much emphasis not only on the “last click” but also the “first click.” It shows how the value and potential priority of various digital marketing channels change if one uses a “multi-touch attribution model.”

Year-Long Study Analyzed 23 Million Conversions

The year-long 2011 study “analyzed over 23 million multiple-interaction conversions across 30 domains, which include large retailers and service providers.” It assigned equal value for each visit or step in the conversion path.

Slingshot SEO explains this “flat multi-touch attribution model”:

For example, in the following series of interactions leading to a conversion, each of the five interactions is credited with an equal portion of the conversion value: Organic Search ($20) > Referral ($20) > Social Network ($20) > Email ($20) > Direct ($20) = $100 conversion. In this case, each channel receives the conversion value divided by the number of interactions in the chain.

Direct Visits Getting Too Much Credit

The company reported that for these 30 clients, “‘direct visits’ were getting more credit for conversions under a last-touch model, as they were often the last interaction before a conversion. As a result, other channels like ‘organic search,’ ‘paid advertising,’ and ‘referrals’ were typically undervalued.” Slingshot SEO said that consumers on average “took 2.79 interactions before converting” and that the final touch or step before the conversion “was typically a direct visit to the site or a branded keyword search.”

The chart above shows the channels that were overvalued and undervalued by Slingshot SEO clients. The negative (orange) cells reflect how much the channel was overvalued; the green or positive cells indicate the percent by which the channel was undervalued.

Organic Search Worth 77 to 81 Percent More than Thought

Organic search was the most consistently undervalued channel. Slingshot SEO’s attribution model argues that “‘organic search’ should have been worth as much as 77.25% more than previously thought, and ‘non-branded organic’ should have been worth as much as 81.59% more.”

It should be mentioned that organic SEO is part of what Slingshot SEO does for a living and so the conclusions and implied recommendations of the report do serve its interests. In addition, the equal weighting of each “touch” is hypothetical and doesn’t necessarily reflect the actual value of each channel in the conversion process. However this is the identical methodology that Microsoft/Atlas was advocating.

Having said all that, the multi-touch attribution model does start to expand the aperture and get marketers to think more holistically about consumer behavior, as well as the fact that multiple influences do play in every purchase decision. As we’ve known for a number of years, consumer search behavior doesn’t exist in a vacuum and is typically stimulated by some event, ad or other influence — often from traditional media or interactions in the “real world.”

Here’s our earlier coverage of the survey:

• Pew Report: 65% View Personalized Search As Bad; 73% See It As Privacy Invasion
• Pew Survey: 68% View Targeted Ads Negatively; 59% Have Noticed Targeting

To recap the basic findings, Pew reported that search usage was highly popular and essentially tied with email as the most common online activity — and still quite a bit more popular than social networking according to these findings.

Google’s US market share is just over 66 percent according to the most recent comScore data. However when asked which search engine they used most often, 83 percent of Pew respondents said Google.

The upbeat survey findings took an abruptly negative turn when Pew started asking people about search personalization and data mining. Two-thirds (65 percent) of users said search personalization was a “bad thing.” Nearly three-fourths (73 percent) said that data mining for the purpose of personalizing search results was “not okay.”

What’s fascinating here is that the public, at least in terms of these survey findings, doesn’t seem to be associating Google with any of the “not okay” things they don’t like about personalization and ad targeting. In fact there seems to be a complete disconnect between survey respondents’ positive views of search, and by extension Google, and disapproval of personalization and data mining.

Pew didn’t insert Google’s (or Bing’s) names into the questions about personalization or data mining to see if these activities would harm brand perception and usage. Pew simply asked about data mining in the abstract. However it would have been very interesting to see the answers to those more specific questions.

Google has met with intensifying criticism in the recent past over several privacy related incidents and missteps (e.g., Cookiegate, privacy policy changes). But the general US public seems not to have noticed. Google is probably assuming that any furor over SPYW and privacy will simply blow over and it won’t suffer any brand or image “penalty” or consumer defections to Bing. That may be a correct assumption — although the issue of online privacy is not going away any time soon.

My guess is that Google will generally ignore the Pew survey findings (though legislators probably won’t) and continue, full speed ahead, on its present personalization course.

Related Entries

• Pew Report: 65% View Personalized Search As Bad; 73% See It As Privacy Invasion
• Pew Survey: 68% View Targeted Ads Negatively; 59% Have Noticed Targeting
• Cookiegate Another Privacy Black Eye For Google
• Google Didn’t “Track” iPhones, But It Did Bypass Safari’s Privacy Settings
• Google’s SPYW, Kenya Imbroglios An “Ink Blot” Test For Google As Good Or Evil
• Google Now Forcing All New Users To Create Google+ Enabled Accounts
• 36 State Attorneys General Call For Privacy Meeting With Google
• Apple, Google In Privacy Hot Water Over “Locationgate”
• Google’s New Terms Of Service & Privacy Policy: Anything You Do May Be Used To Target You?
• Europeans, EPIC Bring More Scrutiny To Google Privacy Changes
• No, You Don’t Need To Fear The Google Privacy Changes: A Reality CheckSurv

In this article I want to focus on a single finding: 49 percent of smartphone and tablet owners are using apps to find local information. On one level this is unremarkable and makes sense; apps are popular and there are lots of apps that use location in one way or another.

We know from Google that 40 percent of browser-based mobile search has a local or offline intent. That already represents significant query volume. But what if half of the local search query volume on mobile devices (and tablets) goes through apps?

That’s not exactly what the survey data show, but it’s a very logical and plausible inference.

We don’t know the total volume of app-based search or local search because nobody is tracking that right now in the same way that PC query volume is tracked. Yet if half of mobile users in the US (including tablets for this discussion) use apps for local lookups and research it stands to reason that perhaps half their queries go through apps vs the browser (read: Google).

Source: comScore, Localeze, 15 Miles

The absolute volume of local-mobile queries could be greater in apps than the browser. This is because smartphone and tablet users (in particular) are typically more active and engaged than PC users as a general matter. The chart above shows that tablet owners conduct (on a percentage basis) more daily and weekly local searches than smartphone and PC owners.

This is “informed speculation” on my part, but I would imagine that if half of mobile consumers are using apps for local search then at least half of local search query volume is happening inside those apps. In terms of which apps smartphone and tablet owners are using for local searches and lookups, comScore found the following:

Source: comScore, Localeze, 15 Miles

My understanding is that this question involved a predetermined list of choices so it does not reflect all apps being used by consumers for local search. For example, 20 million people are using Foursquare but it’s not represented here (unless reflected in “other”).

The top app being used for local search is Google Maps according to the study. However, Yahoo, Mapquest, Bing and others are not that far behind and apparently in a more competitive position vs. their relative positions in search on the PC. Indeed, there are some very interesting implications for Google if Google Maps were to be replaced by an Apple mapping product at some point.

The data reflect that mobile search usage has nearly 100 percent penetration among smartphone owners, most of whom search at least once a week. Though it’s not made clear in the data released I assume this is browser-based search and does not include search via mobile apps. Google’s browser-based mobile-search share is 97 percent globally, according to StatCounter.

Mobile app usage is also prevalent according to the survey results. Japanese users have the most apps installed (42), while US smartphone owners have an average of 26 apps on their handsets. However in terms of regular usage, Google found that in the US smartphone owners used an average of 11 apps during the past month.

Google also found that smartphone owners were heavy video consumers and social networking users. However the most powerful data in my view reflects how consumers are using smartphones to help make purchase decisions mostly offline.

Google found that 92 percent of smartphone owners in the US seek local (offline) information via their devices, and that 89 percent of those people took some form of action after such a lookup. Beyond this Google said that 25 percent of people in the US made a purchase after a local lookup. In addition, in the US, 51 percent called a business and 48 percent actually went to the business location.

Google also discovered that 63 percent of US smartphone owners made purchases on their smartphones at least monthly, with 20 percent saying they made daily purchases. The study also illustrated consumers’ increasing reliance on smartphones as research tools that influence buying behavior in stores and online.

You can find lots more of the data from the above study here. In addition Google’s Spero offered mobile predictions for 2012:

1. More than 1 billion people will use mobile devices as their primary internet access point.
2. There will be 10 days where >50% of trending search terms will be on mobile
3. Mobile’s role in driving people into stores will be proven and it will blow us away
4. “Mobile driven spend” will emerge as a big category
5. Smartphones will prove exceptional at driving a new consumer behavior
6. Tablets will take their place as the 4th screen
7. New industry standards will make mobile display easy to run
8. 5 new, mobile first companies will reach the Angry Birds level of success
9. The ROI on mobile and tablet advertising will increase as a result of the unmatched relevance of proximity
10. The intersection of mobile and social will spark a dramatic new form of engaging consumers
11. 80% of the largest 2,000 websites globally will have an HTML5 site
12. One million small businesses globally will build a mobile website

For comparison, here are my prior mobile predictions for 2012.

The following were the most frequently searched local content categories in Q4:

Ad performance reported by xAd exceeds comparable online CTRs for both search and display. The network said that average CTRs in Q4 for local search ads were 7 percent, while locally targeted display ads yielded 0.6 CTRs.

Beyond the initial click xAd captures “secondary actions” (i.e., calls, map lookups). The company said that among those who clicked on ads, 37 percent of search clicks and 5 percent of display CTRs delivered these secondary actions.

The secondary actions were further broken down by xAd. Calling a business was the most frequent secondary action taken by local searchers, while maps/directions lookups was the most common action among those clicking on display ads.

Another interesting observation is how display responders (above right) sought more information or reviews but local searchers did not as frequently. This likely indicates the more “directed intent” of search-ad responders vs. display clickers who were being exposed to new information or businesses.

One of the most interesting findings in the xAd report shows how search and display ads reach people at different times of day. While the complementary nature of search and display advertising online is well established, xAd shows by daypart how the two can work together in mobile.

Local search peaks during the middle of the day and declines in the evening. However display exposure peaks “after hours” when people are in leisure mode.

Finally, xAd said that among all mobile subscribers, “mobile browsers are still the primary access method for local-search information.” However for iPhone and Android owners, “in-app access is preferred by a large margin over in-browser access.”

Others have reported similar data, confirming the preference and trend toward apps among smartphone users. “We expect that trend to continue as more users of feature phones switch to smart devices,” explains xAd.

While Google “owns” 95 or more percent of mobile-browser based search the same is not true in the app world, which is more verticalized.

Based on underlying comScore data, the report analyzes visits to the top five websites in several verticals: Media, Retail, Travel, Auto, Finance and Health. It doesn’t discuss the impact or relative position of Facebook at all, possibly because Facebook is not yet a public company.

Mahaney points out that Google’s retention of the position of top traffic referrer is an accomplishment in a marketplace that is so “fluid” and intensely competitive.

The report has a number of key findings, which I’ve distilled here:

Google ranked as the #1 source of traffic for 23 of the top 30 Websites. “By contrast, the #2 (Yahoo!) and #3 (Microsoft) influencers accounted for 11 percent and 6 percent of traffic to the top 30 Websites.”

Google’s “influence is [very slowly] slipping”: Mahaney said that “Google has gone from delivering 17 percent of all the traffic to the top 30 Websites in 2010 and 2011 to 16 percent in 2012.” The one vertical studied in which Google’s influence has waned considerably is Heath (see chart above).

Yahoo and Microsoft’s traffic is flat: the report said that “Yahoo!’s and Microsoft’s share of traffic “has remained essentially flat from 2010 to 2012.” This is regarded as a surprise on both counts.

Mahaney said that flat traffic is positive for Yahoo given the market’s perception of the company/site as a “deteriorating asset.” By contrast this is “arguably something of a negative surprise [for Microsoft] . . . given signs of Bing Search market share gains.”

For the iPhone-app study, just published yesterday, Mediative monitored eye- and click-tracking with 12 people in Canada. They ranged in age from 21 to 45. The participants were asked to find places to get a tattoo in each of several Canadian cities. Here’s the task as described by Mediative:

Every participant in the study was given the same scenario as in the previous Google Places study – an imaginary road trip with stops in Hamilton, London, Winnipeg and Edmonton, with the task of choosing a place for a friend to get a tattoo in each of those cities based on the Google Places search results. From the participants in the eye tracking part of our study, we recorded each individual session, and then compiled the sessions to create heat maps that represent aggregate gaze data and supplement the qualitative findings.

Screen size was a critical difference between the PC and iPhone studies. Beyond this Mediative found that images and reviews were very important in capturing users’ eye movements and clicks.

The image on the left shows yellow bubbles of various sizes. The larger the size of the bubble, the more time the eye spent in that area of the screen. The numbers represent the progression of movement of the eye across the screen during the first several seconds. In other words the eye spent the most time on an image on the right, which was nearly the last thing considered in this sequence.

On the right screen above, red indicates more time spent and green less time spent. The second image in this case got the most attention among the three images. Mediative explains: “It’s the only image on this screen of a tattoo; both the other images are of storefronts.” Thus the image was directly relevant to the searcher’s objective: find a tattoo vendor.

As a general matter, people on the iPhone app scanned left to right and then down the page, not unlike eye-tracking patterns on the desktop. According to Mediative, reviews were an especially significant factor in eye-tracking patterns in the iPhone test:

People typically start looking in the upper left part of the screen, scan from left to right, then move down to the next result, and scan from left to right again. However, given the small space of the iPhone screen, some people will have their attention pulled to the right to look at an image, and may continue a scan down to the next image, before resuming a left-to-right scan pattern. If they start scrolling down, then their gaze will stay on the left side until they hit a listing of interest. In the examples we used in this study, in almost every case it meant that they would scroll down until they hit a listing with a better than 3-star review.

What Mediative observed is that where there were fewer “social signals” (e.g., reviews) among the top results users went further down the page to find places that had not only reviews but at least three stars. According to the report, “This presents an opportunity for businesses whose websites are not listed at the top; they can be more competitive by adding positive reviews.”

Mediative offered the following conclusions and recommendations:

• Reviews and other social signals grab attention: “If a business website is listed in any position other than the top three, and the listing does not include any social signals, it will be relatively ignored, especially if there are other listings that do have social signals.”
• Reviews drive clicks: “Positive reviews on the Google Places iPhone app were the biggest single factor we observed that determine which listings got clicks and which did not.”
• Volume of reviews matter:  Mediative found “that 29 of the 47 clicks went to listings that had at least four reviews.”
• Images matter too: “People . . . look at the images to see if the business looks trustworthy.” The type of image may matter as well: “We recommend giving the image that accompanies a listing some special consideration, and remember that an image that might work on a desktop might not work so well when reduced to a phone.”

You can download the entire report here (registration required).

Related Entries

• Eye-Tracking In Google Maps: Study Shows Value Of No. 1 Ranking & Social Content
• Eyetracking & SEO: Fad, Fact, Or Fiction?
• Eye-Tracking Study: Everybody Looks At Organic Listings, But Most Ignore Paid Ads On Right
• Survey: 6-10 Local Business Reviews Required For Trust
• Survey: Local Reviews Gaining In Importance
• Eye Tracking Study Shows Importance Of Search Snippets

Earlier this month, we released the RKG Digital Marketing Report with this in mind. Our goal is that it serves as a credible benchmark for advertisers who don’t enjoy the luxury of viewing results across multiple sites with multiple channels each. In our report, we offer our insights and data for paid search, SEO, and Facebook, as well as comparison shopping engines and multi-channel attribution.

We’ve covered the big trends, but we also tried to uncover some subtler ones, a few of which we think you’re unlikely to see anywhere else.

Generally, RKG’s Q4 results are directionally in line with the emerging consensus out there on the higher level metrics. We saw paid search spend growth accelerate in Q4 to a 31% year over year rate, up from 21% in Q3.

A significant increase in click-through rates was the primary driver, while cost-per-click actually fell 1.4% Y/Y. With revenue per click increasing modestly, our advertisers enjoyed an 8% increase in return on ad spend.

Paid search growth on Google was even more impressive, with ad spend up 39% Y/Y on a 46% increase in clicks. Click-through rates on Google were 26% higher than in the fourth quarter of 2010, speaking to Google’s efforts and ability to drive more and more users to the paid listings through appealing new ad formats and tweaks to existing ones. CPC fell 5% on Google though, and that may give some pause.

Increased mobile traffic, which has lower click costs, is certainly a contributor here, but we also have to consider what ultimately enables higher CPCs: higher revenues per click. We only see RPC increasing 2.6% Y/Y on Google in Q4 and that serves as a significant constraint on CPC.

Google’s Product Listing Ads format, which migrated to AdWords and shifted to a CPC model in the Fall of 2010, generated 8% of Google spend for the quarter and, for some advertisers, represented a larger traffic segment than Bing and Yahoo combined.

Even though we see Bing and Yahoo making some strides, our figures for them seem to be a little more pessimistic than those we’ve seen elsewhere. In Q4, our combined spend for the two engines was down 6.1% Y/Y, an improvement from an 8.7% Y/Y decline in Q3.

Our revenue per click was roughly 23% higher though, allowing CPCs to rise 12% while our advertisers took home a 10% higher ROAS. Click-through rates did improve on Bing and Yahoo, but not to the same extent as we saw on Google.

At least part of the problem for Bing and Yahoo is a continuing decline in traffic from its search partners. Last fourth quarter, Bing and Yahoo generated over 28% of their traffic from partners, but that has fallen steadily to 21% in Q4 2011. This helps advertiser revenue per click, but if adCenter is unable to deliver much additional ad inventory for subsequently raised bids, we see our ROAS increase, rather than volume.

It’s important to point out that we are now comparing to post-Search Alliance numbers and, given that the Alliance appeared to hurt Yahoo traffic at the time, we would expect a growth rate improvement for that reason alone.

Also, there may be some upside to these numbers as our analysis factored out brand keyword performance to limit the impact of extrinsic variables like offline media buys. Unfortunately for advertisers, we saw brand CPCs soar on Bing and Yahoo.

In the end, we see Google increasing its dominance it paid search, taking nearly 87% of clicks. On the organic side, we see Google with an 84% share, giving us all a couple more reasons to scratch our heads at comScore’s figures. Google is losing some of its advantage in CPCs commanded, but again, mobile is factor here and Bing and Yahoo have almost no mobile share to speak of.

Speaking of mobile, by the end of the quarter we saw traffic from smartphones and tablets generating over 14% of paid clicks, but for the entire quarter, mobile share was just under 10%. This was right in line with our organic search figures which also pegged mobile at 10%.

Tablets are the major driver here — even though the “mobile” moniker may be inappropriate for them — and we saw tablets overtake smartphones in December. The iPad remained dominant with a Google-esque 88% share of PPC tablet traffic, but the Kindle Fire was able to carve out a solid niche for itself with nearly 4% of tablet traffic after Christmas.

While Facebook garnered increased attention and budget dollars from marketers, it largely remained a growth opportunity given the sheer scale of its traffic and its grasp on its users’ time online.

For our SEO clients, Facebook generated a little under 4% of referral traffic in Q4. Those running Facebook ads found that they were able to generate an average of 90% of their unique impressions on Facebook from paid activity.

As we move deeper into 2012, the importance of social media, particularly to SEO, looks like it will only grow by leaps and bounds. Google’s Search Plus update may have been as controversial as it was significant, but don’t expect Google to back down on this one, and if they can finally play nice with Facebook and Twitter, things will really get interesting.

On the paid search side, we are seeing the major Q4 trends continuing into the new year with strong spend growth fueled by CTRs giving advertisers a solid return on their investment.