8 In 10 US Marketers Upbeat About PPC Advertising; Text Ads Most Effective Ad Format

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Pay-per-click (PPC) advertising continues to perform well in 2016.  More than 4 in 5 US marketing professionals surveyed by Hanapin Marketing revealed they are happy with the way PPC advertising has worked out for them so far this year. More than two-thirds (68%) said PPC advertising performed better than last year.

PPC advertising is a cross-channel online advertising model in which an advertiser pays a publisher or advertising network a fee each time an ad is clicked. Since the introduction of PPC advertising by GoTo.com, in February of 1998, the emphasis has been on search, but over the years an increasing number of digital marketing channels have begun using the pay-per-click payment model. (Full infographic at the end of the article)

Pay-per-click advertising trends

Hanapin Marketing recently surveyed hundreds of US marketing professionals about their attitude towards the PPC marketplace, general industry trends and their outlook for the next 12 months. Some of their key findings are as follows:

– Search text ads, mobile advertising and remarketing are the preferred top-3 PPC advertising tactics

– Only 14% of PPC advertisers spent over $1 million a month in 2016 on PPC advertising compared to 59% in 2015

– Overall 69% of survey participants reported that the cost-per-click (CPC) for PPC advertising increased in 2016 compared to 2015

– Nearly 3 in 4 survey participants are planning to increase their Google AdWords, Facebook and Mobile PPC advertising budgets in the next 12 months

Most Effective PPC Channels

PPC ads ‒ especially paid search in the form of text ads ‒ seem very basic, but they continue to deliver results for marketers and rank consistently high among spending priorities. It is, therefore, no surprise that three-fourth (75%) of participants in the Hanapin Marketing survey are planning to increase spending on Google AdWords in the next 12 months.

Retailers specifically have been increasing their PPC advertising spend on Google with PLA shopping ads. As shoppers engaged more with Google’s paid search text ads, retailers have spent more. Retail revenue from Google Shopping grew 52% year-over-year in Q1 2016, according to Business Insider. This revenue was driven largely by mobile engagement. In addition, AdGooroo found that retail advertisers spent $1.44 billion on US Google desktop text ads in the fourth-quarter of 2015, up 24% compared to the same quarter the year before. AdGooroo also reported that PLAs had higher average CTRs and a lower average CPC compared with regular text ads for the top 2,500 retail keywords in the fourth quarter of 2015.

86% of participants in the Hanapin Marketing survey reported effectiveness for text ads in 2016 versus 90% last year. Remarketing (65%) and mobile PPC advertising (56%) were considered the second and third most effective PPC channels. But not far behind, social media (42%) has been gaining momentum and is seeing a planned budget hike over the next 12 months. Only 21% of respondents claimed that display advertising has been effective for their business this year.

Monthly PPC Spending

The Hanapin Marketing survey data revealed a decrease in agency big client spending.  This year, only 14% of PPC advertisers spent more than $1 million per month compared to 59% in 2015. PPC advertising spending over the last 12 months, as reported by Hanapin Marketing, breaks down as follows: 39% less than $50K per month; 28% between $50K and $250K per month and 19% between $250K and $1 million per month.

CPC and Conversions

69% of survey participants reported that the CPC had increased over the past 12 months for desktop and mobile paid search, with 63% saying the same about desktop paid search conversions. More than half of participants (54%) said that social PPC conversions had increased. 

Planned Budget 2017 Increases

Mobile and social media are now prominently established in the budget plans of US marketing professionals and are set for major growth in the next 12 months, according to Hanapin Marketing. Nearly 3 in 4 respondents (73%) indicated that they will increase their mobile budgets over the next 12 months, while more than two-thirds (69%) will do the same with respect to their Facebook PPC advertising budget. Those two channels trailed the Google AdWords PPC channel, which is to receive a budget hike from three-quarters (75%) of the respondents. Aside from Bing Ads ‒ for which slightly more than half (53%) of survey participants are planning a budget increase ‒ other channels don’t create as much enthusiasm for budget increases over the next 12 months. Roughly 4 in 10 survey participants plan budget increases for Instagram (41%) and display advertising (39%), but programmatic (22%), native (21%) and Twitter (21%) are further back, as are Pinterest (18%) and Snapchat (15%).

PPC advertising trends