A surge in tablet use will push Google’s US mobile revenue to $9.9bn this year, a massive leap from the $5.8bn generated in 2012, according to a new report.
The study, from search ad technology provider Marin Software, forecasts that tablets will drive 20% of Google’s paid search ad clicks in the US by December, 2013, up from 10.7% in December, 2012.
This means Google could make around $5bn in tablet search ad revenue during 2013, according to the report.
The report cites a Cowen and Company estimate that Google will realize $9.9 billion in mobile ad revenue in 2013 (up from $5.8 billion last year).
The main reason for the growth is consumer’s increasing use of tablets to buy products and services online as well as research items they’re thinking of buying.
Marin predicts the conversion rate of search ads originating from tablets will pass those of desktops before the end of this year.
Google announced a change to its ad system last week, now requiring advertisers to pay for ads on tablets even if they just want to reach personal computer users. In a blog post announcing the change Google said it made the move because “… as devices converge, consumer behaviors on tablets and desktops are becoming very similar.”
The forecast follows what Marin already estimates was solid growth. For 2012, the company estimates the share of overall paid search clicks served by Google on tablets increased from 6% to 10.7%. Now it’s projecting tablet’s share will double by the end of this year.
Conversion rates lead to higher ad costs
Conversely, Marin Software says that while conversion rates on search clicks originating from tablets increased dramatically in 2012, up 31%, the conversion rate on smart phones increased just 9% and desktops just 7%.
In addition to rising conversion rates, Marin Software found tablet ads have favorable performance characteristics relative to desktop ads.
Favorable performance characteristics of tablet ads coupled with high consumer adoption are driving advertiser investment and rising costs-per-click. Marin found that the share of search ad spend directed towards tablets grew from 4.8% to 10% in 2012 with spend on tablets eclipsing smartphones for the first time in Q4 2012. According to Marin, the CPC of tablet search ads increased 25% in 2012, and Marin predicts tablet CPC will equal desktop CPCs by the end of 2013.
“While the rise of tablets is no secret, what’s interesting is tablet users are engaging with search ads and converting in ways that closely resemble desktop usage,” said Matt Lawson, VP of Marketing and Partnerships at Marin Software in a release. “Solid user engagement combined with favorable performance characteristics make search ads on tablets hard to resist for advertisers.”
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In the U.S., Marin Software clients saw an increase in paid search clicks coming from Google, accounting for 23.4 percent in 2012, up from 14.2 percent the previous year.
Marin’s US customers increased their mobile search spending by 85 percent in 2012, from 10 percent to 18.4 percent. The company says that mobile devices will account for one-third of paid search clicks and one-third of search budgets by December 2013.
In the UK, Google’s share of paid clicks from mobiles increased 65 percent, while in Europe, the increase was even greater, increasing from 5.9 percent to 14.5 percent. UK advertisers increased their share of search budget on smart mobile devices from 9.94 percent to 19.32 percent last year, an increase of 94 percent, while Eurozone advertisers upped their investment in mobile search from 4.8 percent to 11.8 percent of paid search budgets, an increase of 146 percent.
In the rest of the world, Marin analyzed Google search data and found that mobile’s share of paid search clicks was highest in Australia (21 percent), Japan (16.2 percent) and Singapore (22.5 percent). While advertisers’ spending on paid mobile search in Singapore was close to on par with CTRs, at 22.5 percent of total budget, other countries had not caught up.
Marin Software’s annual report, “Mobile Search Advertising around the Globe,” outlines key trends, projections and optimization strategies for advertisers seeking to get the most from their mobile paid-search campaigns.
The full report can be downloaded here
Marin Software will host a Mobile Trends webcast on March 7 at 10 am PST to discuss the results of its findings and best practices for marketers. To sign up, click here.