RKG Report: PLAs Fuel AdWords Growth, Bing Ads Spend Rises Sharply In Q4

RKG has released its Q4 2013 Digital Marketing Report, and as other reports have indicated, paid search saw solid year-over-year growth in the holiday quarter. Paid search spend among RKG’s retail-heavy client set rose 23 percent year-over-year. Overall click volume increased 19 percent, and CPCs ticked up just 3 percent.

Google Brand CPCs Fall On Ad Rank Change, Non-Brand CPCs Fueled By PLAs

Google paid search spending grew 19 percent year-over-year in Q4, with paid clicks rising 15 percent. Google CPCs also rose just 3 percent. Non-brand CPCs, however, rose 6 percent year-over-year, driven by PLAs (more on that further down).

What’s interesting is that after Google made changes to its Ad Rank logic to favor ad extensions and formats in October, RKG saw “a clear decline in CPC around that time, particularly around brand keywords.” Thus, just the 3 percent net increase in CPCs for the quarter.

Google PLA CPCs Rise Above Text Ads For The First Time

On average, product listing ad CPCs began outpacing non-brand text CPCs for the first time in Q4, highlighting the increased competition for these image ads among retailers during the holiday season. Spending on PLAs increased 72 percent year-over-year among RKG’s client sample.

Retailers running both Google Product Listing Ads and text ads generated 42 percent of their non-brand traffic from PLAs. For more details, Mark Ballard, Senior Research Analyst at RKG, recently wrote an in-depth column on Search Engine Land about the impact of PLAs on non-brand traffic.

Bing Ads Growth Driven By Non-Brand Traffic

Fourth quarter spending on Bing Ads rose 43 percent year-over-year. Non-brand spending increased 50 percent year-over-year, on a 43 percent rise in click volume. CPCs rose 5 percent, year-over-year.

Bing Ads Product Ads, which continued to run in closed beta through the quarter, accounted for 7 percent of non-brand ad spend and an average of 5 percent of non-brand revenues from Bing Ads among RKG’s participating clients. ROI was lower than Bing Ads text ads, but RKG says the ad unit has shown potential.

Mobile CPCs Remain Low Even As Spend, Traffic Increase

Smartphones and tablets generated a combined 32 percent of paid search clicks and accounted for 25 percent of paid search ad spend.  Smartphone CPCs remained 60 percent lower than desktop and tablet CPCs. Similarly, IgnitionOne reported a 13 percent drop in smartphone CPCs in Q4 compared to a year ago.

Desktop traffic growth stayed flat as smartphone clicks rose 104 percent year-over-year and tablet clicks rose 93 percent.

RKG saw mobile traffic spike on both Thanksgiving and Christmas day to 43 percent and 45 percent respectively. The week of Christmas, mobile traffic share hit 40 percent, up from 30 percent in October, which could indicate a new benchmark for Q1 2014. RKG reports that, in years past, mobile has sustained its Q4 traffic share into the following year.

The complete report is available for download here.