Search engine advertising ROI rocketed past Q3 figures.
Posted Jan 14, 2005
Swelling click prices weren't enough to curb the hefty ROI that marketers pulled in from their search engine advertising campaigns during 2004's holiday season, according to analysis by DoubleClick's marketing services arm, Performics.
For the third and final chapter in the "DoubleClick Holiday 2004 Shopping Report" series, Performics analyzed activity for its clients on Overture and Google, specifically the unweighted daily client averages from December 1, 2004 through December 24, 2004, in comparison with the unweighted daily client averages for third quarter 2004. Not included, however, are the figures from December 2003. According to Stuart Frankel, senior vice president of DoubleClick and general manager of Performics, comparing 2004 to 2003 would have been like comparing apples to oranges. "It's so different in 2004 over 2003 in terms of our client mix, what they were willing to spend, [and] the number of keywords that each client had in their program, so we just felt a period-over-period comparison was not going to be accurate," he says. "We do know though that search was significantly bigger in 2004 over 2003."
In December the unweighted average number of daily clicks per client was more than double the amount generated during third-quarter 2004. Average price-per-click in December also increased by 23 percent, but the higher click volume translated into a tripling of the average advertisers' total media investment, compared with the daily average for the previous quarter. "There's a lot more people advertising in December, and you would expect click costs to go up, [but] they actually went up a little bit less than what I thought they were going to," Frankel says. "Marketers are getting smarter and smarter in managing programs very efficiently, and [in] understanding how to add more keywords to programs to get their average click costs down. We counteracted market forces, which were bringing prices up, by just increasing the size and the breadth of a search program to allow us to keep the average click costs in check."
Clients may have spent more in the fourth quarter, but their ROI made up for it. During December the average client conversion rate increased 124 percent, and the unweighted daily client average for total gross revenue that search marketing programs generated for merchants rose 375 percent, compared to their third quarter 2004 counterparts. The average ROI climbed 58 percent in December, compared to the late-summer months' average. "The more dollars people were spending, the programs actually became more and more profitable for them," Frankel says.
Seasonality clearly has an impact on how often shoppers use these search services and the ROI they generate, but Frankel says there is a real opportunity for marketers to continue to invest in search. "Consumer acceptance and consumer use of search services to do research and then ultimately buy is increasing, because the number of searches across the board that are being conducted across various search engines is increasing," he says. "Consumers are finding the information that they need from search results to make purchase decisions."
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