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More Ad Dollars Shifting to Mobile Search but Google-Enhanced Campaign Complicating Things for Marketers

As marketers continue to innovate the ways they target
audiences, new channels such as mobile advertising and programmatic display are
showing the greatest increases in ad spending, according to a report on second-quarter
digital advertising by IgnitionOne.

But the presence of Google's Enhanced Campaign, which
reworks the measurement grid between devices, represents a growing shift for
those marketers going forward.

The report states that total U.S. search ad spending in
second-quarter 2013 was up 7% when compared to the same quarter in 2012. Retail
was the strongest growth category in ad search, with spending in the second
quarter up 18%.

However, U.S. mobile devices saw a triple-digit increase in
spending in the second quarter compared to last year's second quarter with ad
spending on smartphones up 106% and spending on tablets up 116%.

Breaking down that ad spending further, 59% of the total
dollars spent on mobile devices in the second quarter came on tablets, with 41%
on smartphones.

Within programmatic display ad spending, the two categories
showing the most growth in the second quarter vs. last year were retail, up
130%, and travel, up 156%.

IgnitionOne is a cloud-based digital marketing technology
company that provides proprietary platform services to clients including
General Motors, La Quinta, Fiat, Ann Taylor, DirecTV and Travel Guard, along
with agencies such as GroupM and iProspect.

The report was gleaned using new and historical data from tracking
more than 100 billion impressions and more than three billion clicks on Google
and Yahoo/Bing search networks, Google AdEx and other display networks from
Jan. 1, 2006, through June 16, 2013.

A breakout of ad spending by search engine in the second
quarter finds 79.2% of the ad dollars were on Google, while 20.8% were spent on

The report also examines Google Enhanced Campaigns and
states: "In these early days of the migration to Enhanced Campaigns, we are
seeing a jump in both cost and CPCs (cost per click). Presumably, this is
driven by two main factors: an increase in competition in the mobile
(smartphone) and tablet space, as well as a loss of granular/keyword level
control of the mobile and tablet channels."

Ads are positioned on search pages based on their Ad Rank.
The ad company with the highest rank can improve its ad's positioning and
reduce the cost per click. The Ad Rank is determined by multiplying the CPC bid
by the Quality Score. The CPC bid is the maximum cost per click a marketer is
willing to pay for a single click when its keyword triggers the ad. Quality
Score is a metric assigned to each keyword. There is a formula that determines
the Quality Score on Google that involves historical click-through rates of the

Enhanced Campaigns: A
New Wrench in the Works

The report says that prior to the creation of the Google
Enhanced Campaigns, only advertisers who wanted mobile or tablet presence were
influencing cost-per-click numbers. However, under the Enhanced Campaigns
system, marketers cannot choose only mobile or tablets.

In a separate Adobe report on Enhanced Campaigns, Sid Shah,
director of business analytics for Adobe's Digital Marketing Business explains
that Google Enhanced Campaigns is "fundamentally changing the world of search
advertising by grouping desktop and tablets and distinguishing them from
smartphones and other mobile traffic.

"The new unified device targeting functionality in Enhanced
Campaigns no longer allows marketers to separately target mobile, desktop and
tablet devices. Instead, desktop and tablet bids are forced to be the same and
mobile bids are simply set as percentage adjustment relative to desktop and
tablet bids," Shah says.

What this means is that historically lower CPCs for tablet
campaigns will increase to reflect desktop CPCs. Google has set a July 22
deadline for advertisers to migrate to Enhanced Campaigns.

The IgnitionOne report says, "Now with an increased flow of
advertisers into the space, competition has jumped significantly, thus forcing
all to pay higher CPCs for previously held ranks. These effects are more pronounced
on the mobile side because Rank 1 is so important for smartphones and with
everyone aiming for the top spot, the CPCs have skyrocketed. The loss of
granular control adds to the complexity by preventing marketers from cherry
picking a few terms to support their mobile or tablet budgets, forcing them to
spread out budgets across campaigns, thus driving up overall cost."

Adobe is projecting ad spending on Google will
increase between 15%-20% this year but a good portion of that will be due to
increased traffic growth generated by the Enhanced Campaign migration.