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Factors that Drive Digital Advertising Spend

According to a report, while Facebook is still an emerging digital advertising channel, search remains the biggest driver of ROI (Return on Investment) for marketers.

Adobe (Nasdaq:ADBE) released findings from its Adobe Digital Index today, April 11, with a report focused on digital advertising industry insights for Q1 2012, as well as an outlook for the remainder of the year. The report shows that digital advertising continues its rapid growth across all channels.

Key Report Findings for Q1 2012      

Spending on mobile platforms reached eight percent of all search spend in the United States, and 11 percent in the UK. Tablets alone account for four percent of total search spend in the United States. Mobile devices and tablets are lower-cost channels and ultimately contributed to Google’s Cost Per Click (CPC) decline of five percent Year over Year (YoY). In contrast, Bing/Yahoo’s CPC increased by 18 percent YoY.

Traffic on mobile devices, specifically tablets, increased four-fold YoY, and advertisers were quick to respond, growing search investments in mobile and tablets by 250 percent YoY.

Facebook spend has grown by 93 percent YoY and now represents three to five percent of search spend, indicating that social continues to be a strong, emerging digital advertising channel.

Outlook for Q2-Q4 2012

Every month Adobe analyzes advertiser data from over $2 billion in annualized spend under management. Based on a client index from the past three quarters (beginning in Q2 2011), some key trends are emerging:

Search spend in the United States is expected to increase at a rate of 10 to 15 percent for the rest of 2012 – consistent with macro trends.

Tablet and mobile spend will likely make up 15 to 20 percent of all search spend by the end of 2012. Investments in tablet advertising will grow as tablet visitors are rapidly increasing. Conversion rates on mobile devices are comparable to desktop performance even though mobile CPCs are 30 percent lower.

While Facebook ad CPCs have increased 40 percent Quarter over Quarter for the past three quarters, CPCs on Facebook ‘Sponsored Stories’ tend to be lower than Facebook ‘Marketplace Ads’, which may contribute to temporary decreases in CPCs.

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