In 2013 mobile search exploded but the dollars haven't followed suit (yet)

By James Robinson , written on March 19, 2014

From The News Desk

In 2013 we got really used to searching for things on our mobile devices. The only problem now according to Marin Software’s new ‘Mobile Search Advertising Around the Globe’ report is that while the number of paid search clicks on mobile doubled in 2013, advertising dollars didn’t keep pace.

At the start of 2013, the portion of paid search clicks coming from mobile and the amount of ad spend flowing into this channel were almost identical at a little less than 22 percent. This according to Marin’s report, which draws from its roster of client that collectively represent over $6 billion in global ad spend. In the last quarter of the year, the amount of paid mobile search clicks grew to 34 percent of the overall pie, Marin says, while the share of mobile spending stayed flat at 28 percent.

Spending on mobile search was 45 percent higher in 2013, but relative to a doubling in paid search clicks, advertisers are now under-spending on mobile.

As the platform improves, mobile search is proving to be a decidedly click friendly medium. We click on ads on our smartphones at 63 percent higher rates than our desktop computers and 38 percent above tablets, according to Marin, with the smaller screen serving up less impressions and the increased urgency of our searching leading us toward ads.

But for those with ad inventory to sell, there remains the problem that mobile CPCs (cost per click) are markedly lower than those on the desktop Web. Marin saw an average mobile CPC of 56 cents, almost 50 percent cheaper than desktop. To reiterate a point I made last week, as the market matures and ad spending should rise, driving up competition for premium inventory. This should elevate mobile CPCs. In fact, mobile CPCs already rose by 20 percent in 2013.

But there remain challenges. Mobile adds still drive lower conversion rates than those on desktop and tablets – almost 20 percent lower. Mobile shoppers are also less likely to complete an entire transaction on their phone, often leading to a sale being completed offline or on a different device. On the upside, as marketers get better at tracking these conversions across platform, this could increase the value ascribed to each paid click on mobile.

An intriguing perspective in Marin’s report is its comparisons of different international markets. In the UK, for instance, more paid search clicks come from mobile and a greater proportion of agency spending goes to mobile search. But the cost per click on mobile is 75 percent less than in the US, which shows that the American market is already more competitive and mature.

The issue is one of abundance and sophistication. Going forward, the near-unanimous expectation is that we'll all use our mobile devices and tablets in infinitely higher amounts. Yet, mobile advertising is in its relative infancy. Desktop search produces predictable results, while mobile happens everywhere and the behavior is harder to track as accurately.

As the industry learns to more effectively track and quantify the behavior of mobile Web users, the dollars shouldn’t lag too behind the opportunity for long. Then again, pundits have been saying that for years.

[Illustration by Brad Jonas for PandoDaily]