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 Lehmbeck gave me some unpublished, internal data that I’m now sharing in this post.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.

Mobile vs. PC Local Search Volumes (BIA/Kelsey Forecast)

Source: BIA/Kelsey (2012)

In some categories such as restaurants and travel, mobile searches represent 15 – 20 percent or more of overall query volumes. There can be no dispute that mobile search is now a huge phenomenon. But will it eclipse PC local search query volume in three years?

Let’s think out loud a bit, shall we?

50 Billion Local Queries on the PC

Using the Google 20 percent figure as a guide we can estimate that in March there were approximately 3.7 billion local searches on the PC in the US. In the absence of significant month over month growth that would translate into roughly 44 billion annual local queries coming through US search engines on the PC. But let’s assume modest local query growth and say there will be something on the order of 50 billion local queries on search engines in the US in 2012. (The number could be higher of course.)

Now, how many local-mobile search queries are there?

Answering that question depends on whether we include app-based local search (e.g., Yelp, Foursquare, yellow pages apps, Urbanspoon, etc.). Data from comScore, Localeze and 15 Miles finds that half of US mobile consumers (survey respondents) say they use apps at least some of the time for local search. However, we don’t know the frequency or the volume of in-app search because no one is really tracking those numbers today.

Let’s limit the definition of “mobile search” to browser based search through one of the major US search engines. However right now Google represents about 95 percent of the total “mobile search” market in the US.

12 Billion Local Queries on Smartphones

If there are roughly 125 million smartphone owners in the US (50 percent of 250 million mobile subscribers) and a large number of smartphone owners do an average 20 mobile searches per month, then there are something like 30 billion mobile searches annually right now in the US. (Let’s leave out tablets of this discussion.) If 40 percent of that overall mobile search volume is local, that would mean roughly 12 billion annual local searches on mobile devices. (This number may be slightly inflated today.)

We can assume growth in smartphone penetration and some growth in per-person mobile search query volume — though this assumption is a wild card for several reasons. It also may be a bit risky to assume that the percentage of overall mobile search that is local will continue to climb significantly, though it could reach 50 percent (which is what Microsoft says it is today on Bing).

Let’s assume smartphone penetration reaches 75 percent (say 187 million people) and each person does 40 mobile searches per month (doubling our per-person monthly query assumption). That translates into 90 billion annual mobile queries. If the local percentage of mobile search volume grows to 50 percent, we’d have 45 billion annual local-mobile search queries.

That event would get us pretty close to PC-mobile local search parity, if there weren’t dramatic PC local search growth. However a number of factual assumptions must come to pass. And the future is not guaranteed to look like the past.

What If the Paradigm Shifts?

The proliferation of mobile apps (whether native or HTML5) combined with the rise of Siri and other voice assistants could mean that browser-based mobile search doesn’t grow much over time. Google has cited figures of 130 percent year over year mobile search growth. But there are reasons to believe that the current PC search model on the smartphone small screen will be supplanted, at least to some degree in the relatively near future.

More than a couple of years out it all starts to get very speculative, since mobile is evolving so rapidly. However, regardless of whether the BIA forecast comes true in three years — I don’t think it can without including in-app search volumes — it’s certainly directionally accurate. And one day in the relatively near future it’s clear that people will be using mobile devices to find local information as much or more than their laptops and desktop PCs.

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.”

Mittlerweile benutzen fast 10 Millionen Nutzer in Deutschland regelmäßig Bing, das sind 20 Prozent der aktiven Internetnutzer hierzulande.

According to several third-party sources, Bing’s market share is smaller than the 20 percent figure cited above. For example, the following is StatCounter’s search engine data for Germany:

Source: StatCounter

NetMarketshare generally agrees, showing Bing’s PC search share at just over 2 percent.

The combined Bing-Yahoo “search alliance” share in the US is about 30 percent. However the search alliance has considerably less reach in Europe. While the organic-results merger was completed last year, Microsoft adCenter is just now rolling out in Europe.

Related Entries

• Search Alliance Begins First AdCenter Testing In Europe
• December “Explicit” Search Numbers: Bing Now Ahead Of Yahoo
• Report: Google Controls 44 Percent Of Global Online Advertising
• Bing, Yahoo Now Neck & Neck In US Search Market Share

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.

IgnitionOne said that among its retail clients, “Mobile search [  ] accounted for 24% of retailers’ total paid search budgets on Black Friday, compared to 14.2% of the total during all of Q4. This represents enormous growth compared to Q4 2010, when mobile search spend accounted for only 5.2% of total retail paid search spend.”

The following chart from IgnitionOne shows the growth of mobile impressions, clicks and search ad spend vs. 2010.

The Marin Software report says the company is seeing increased adoption of mobile and tablet advertising among its clients. More significantly, however, its clients’ campaigns on mobile are “showing significantly better performance than similar campaigns on desktop computers.”

Marin published comparisons for its aggregated search campaigns across PC and mobile. As the chart below indicates, paid search ads on smartphones and tablets outperformed those on the PC in terms of CTRs.

Android handsets now represent nearly 47 percent of the US smartphone market, while the iPhone is just under 30 percent. The comScore data doesn’t reflect iPod Touch or iPad devices.

The firm also said that 39 percent of the US mobile population owned smartphones. This stands in contrast to Nielsen’s 44 percent estimate, which puts the actual number at more than 100 million people.

What’s perhaps most interesting, however, about the data in the report is the fact that it shows (I believe for the first time) more people used apps than used the mobile browser.

Nielsen says that 43 percent of US smartphone owners have an Android handsets compared to 28 percent who own iPhones. These numbers are almost identical to comScore’s. We’ll see if holiday sales of the iPhone 4S change that in any way.

What’s most interesting about the data from Nielsen is the age-based segmentation they do. For those under 44 years old, smartphone penetration has now crossed the 50 percent threshold (54 percent). In fact for those in the 25-34 age category it stands at 62 percent.

If your target audience or prospect base is anyone under 45, know that more than half now own smartphones. Also understand that for some number of them — especially younger users — smartphones and tablets will be primary internet devices.

For its part, Google has projected that “44 percent of total searches for last minute gifts and store locator terms will be from mobile devices this holiday season.”

Performics also believes that tablets (iPad) will play a significant role in search and shopping this holiday season:

The wild card this year will be increased tablet usage.  We think that tablets could show incredibly strong search share over the Cyber Stretch and at least mirror desktop’s day-level seasonality, very possibly outpacing it.  Tablets continued to grow—up from 34.3% of all mobile search clicks in August to 35.8% in September.

The volume of clicks/paid clicks coming from smartphones and tablets should dramatically pick up around “Black Friday” and continue through the end of the holiday shopping season, according to Performics’ estimates.

Whether the specific figures and projections Performics makes are precisely correct is beside the point. Mobile is becoming a very significant influence on consumer behavior and marketers must have an optimized presence and mobile search strategy.

A separate “social shopping” study released today by Performics showed the various in-store use cases for mobile. Price comparison search, deals/coupons and product reviews are the top actions or categories.

The company’s announcement is filled with some interesting stats that show its growth since launching as a Firefox add-on back in 2002:

• StumbleUpon now serves as many “stumbles” in one hour as it did during its first year.
• At peak activity, there are more than 1,000 stumbles per second.
• The user base has doubled from 10 million members in May 2010 to today’s announcement of 20 million members.

There’s also a chart showing many of the site’s milestones over the past nine years.

(click for larger version)

Often overlooked in the search/social marketing industries where Facebook and Twitter tend to dominate the conversation, StumbleUpon has remained active with new features in the last 12 months such as the “Explore” search box and an expanded ad platform.