Big increase in output-based remuneration and use of search specialists; Mobile and social search still lack dedicated budgets
BestMediaInfo Bureau | Delhi | January 16, 2012
The first such survey since 2009 indicates that WFA members – half of those surveyed have responsibility for approximate annual digital budget of nearly $50m – have made notable changes to the way they approach search marketing.
Although the survey is not definitive with 36 responses from global and regional marketers (representing 36 different multinational companies), it provides the best look at how the world’s biggest advertisers are changing the way they approach search. Respondents were responsible for more than $33bn in gross media spend and such large multinational brands often have the most sophisticated approaches to advertising and marketing across all channels.
The survey has been carried out at a time when WFA members are investing significantly more in digital marketing. In 2011, 40% of our respondents spent more than €26m in 2011 compared to 25% in 2009. Spend is still significantly lower in Asia Pacific and Latin America with 57% and 54% investing less than €5m, respectively.
Key changes include:
Major increases in the use of specialist search agencies: Although 55% of respondents still use their media agencies for paid search either locally or globally, the number of advertisers working with a single international specialist search agency has doubled to 23% in 2011. Twenty-six per cent work with a single international digital agency network (up from 17%) while 39% work with specialist search agencies in at least one country. None of those who responded to our survey now manage search internally, a strategy used by 6% of respondents in 2009. Percentages add up to more than 100 because many multinational brands use a range of strategies.
Mobile search and social search is not being specifically resourced in many cases: The vast majority of WFA respondents – 66% – do not yet dedicate budget to mobile search, while 44% do not devote budget to social search. Those who do devote budget to mobile search and social search allocate roughly 1.3% and 3% respectively of their search marketing budget in this way. There are exceptions, however, and 6% of respondents say they devote more than 20% of their search budget to social search.
Output-based agency remuneration is increasingly popular: Although fixed-rate commissions are the most popular way of paying agencies – selected by 33% – fixed or output-based fees are nearly as popular with 30% of respondents using this method, a massive increase from 11% in 2009. Twelve per cent of respondents use more than one method of remuneration.
Most respondents use a KPI dashboard to assess success: On average four different criteria are used to assess the performance of paid search budgets. The most popular KPIs are click-through (71%) and average CPC (65%) followed by cost per conversion (52%) and conversion rate (48%). Sales come last (19%), indicating that most respondents are using search marketing primarily at early stage in the consumer journey despite most also having e-commerce platforms.
There is a clear trend towards centralization of search: More than half of the respondents plan to centralize more of their search spend in the next 12 months with 68% agreeing or strongly agreeing. In part this is a response to the fact that nearly half our respondents (47%) had found that they had been bidding against colleagues for the same search terms in the last 12 months. This move has also been adopted to overcome the failure of agency suppliers to communicate with each other: 44% cited a lack of collaboration between paid and natural search suppliers as an issue.
Said Stephan Loerke, WFA Managing Director, “Paid search is a powerful platform for brands and 84% of those surveyed plan to increase spend in this area. However it could be even more effective for WFA members if there was greater transparency and clarity among media owners and agency suppliers.”