Last Updated: June 17, 2022

The State of Paid Search & PPC Strategy

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An effective paid search (or PPC) strategy is a significant part of a successful marketing mix for many ecommerce brands. PPC advertising includes text ads on search engines like Google and Microsoft Bing as well as paid video ads on YouTube.

We surveyed over 170 marketing professionals for data-backed insights into the top current digital marketing initiatives and trends. Among our respondents, paid search advertising ranks as the top initiative for 2022, with 55.2% naming it as a priority for their brand in 2022. In this article, dive deeper into the data to learn the benefits of PPC advertising for your brand – and how it can grow profitably even in the face of rising paid search CPCs.

More than 3 in every 5 marketing managers say paid search strategy is a big initiative for their brand this year. In 2022, around $39 will be spent on search advertising per internet user.

Google is by far the leading traditional search engine for paid advertising, with 85.6% of the desktop market share as of January 2022. Microsoft Bing comes in at 7.6%, followed by Yahoo! at 2.9%. Google dominates even more on mobile, with 93.3% of the mobile search engine market share.

Google & Bing PPC Advertising

Google also has the biggest ad revenue share compared to Amazon and Facebook, garnering 28.6% of total ad spend in 2021 compared to 11.6% and 23.8% respectively. The landscape is changing, though. Google’s share of the market has been steadily shrinking since 2019 when it had 31.6%, while Amazon has grown since then from 7.8%. Amazon’s domination of the ecommerce marketplace will continue to eat at Google’s share, and by 2023, Google ad revenue will make up 26.4% of the market with Amazon at 14.6%.

Search ad spending makes up 41% of all digital ad spending.

For those considering how to approach their Google Ads marketing strategy, some of the Google Ad types that provide value to brands and retailers include:

  • Discovery Ads: A mobile-focused ad type that leverages user intent data like search history, app downloads, location, and more to automatically target shoppers on Google’s Discover feed, Gmail, and YouTube.
  • Shopping Ads: Product-centric, image-focused ads that appear at the top of organic search results pages personalized Google Shopping feeds, enabling shoppers to purchase products directly from Google.
  • Display Ads: Different from search ads, these are visual ads that showcase your product to users who may not be familiar with it yet, focusing on top-of-funnel brand awareness.

Mobile vs. Desktop

Mobile accounts for over two-thirds of total paid search ad clicks. As of 2020, mobile paid search ad spend was less than social media ad spend by about $700 million, coming in at $32.6 billion compared to $33.3 billion. By 2025, mobile paid search ad spend is expected to be $51.7 billion, with social media moving to rank second at $48.2 billion.

By 2026, mobile search ad spend will total $160.25 billion to make up 58.8% of all paid advertising spending.

It’s safe to say that the marketing world has shifted to a mobile-first mindset, but desktop still reigns for Microsoft Bing. As of Q4 2021, 70% of Google search ad clicks come from mobile compared to 26% for Bing.

Paid Search Advertising Automation

Since May 2018, a key component of paid advertising has been Google Smart Shopping, which uses AI and automation to display your brand’s ads to relevant customers across Google platforms to help increase your return on ad spend and maximize your conversion value. But in 2022, brands advertising on Smart Shopping will be switched to Performance Max. The process will begin in April 2022 and all campaigns will be switched over by September 2022.

Brands that switch to Performance Max see an average 12% increase in conversion value at the same or higher ROAS. Performance Max offers new automation and inventory insights on top of a foundation of Smart Shopping and Local campaigns, including the ability to access all of Google’s ad inventory across channels from one campaign.

28% of marketers use automation in their paid advertising efforts.

Using an omnichannel approach to create a cohesive customer journey will be critical to profitable success in 2022 and beyond. Using automation and AI as the foundation of your paid search strategy will help save time and drive conversions to grow your brand’s revenue. According to our research, 33.7% of marketing decision-makers feel that automation and AI are top trends for 2022.

Blog: Cookieless Paid Search | When Chrome becomes cookieless in late 2023, paid search advertisers will need to be prepared for a shift in strategy. In this blog, learn what you should expect and how much the changes will impact PPC advertising. Read the blog.

Paid Search CPC Growth

At the beginning of the COVID-19 pandemic, paid search ad spend declined significantly as brands and retailers reduced their budgets in light of all the uncertainty. Paid advertising spend on Google was up 14% year-over-year in February 2020, but in March 2020, that dropped to just 4% growth. Ad spend stabilized again by March 2021 to 14% YoY growth. Google paid search ad spend grew just 7.7% YoY in Q1 2020, followed by 21.7% YoY growth in Q1 2021.

Digital search ad spending has increased significantly since then as businesses adjust and consumers spend more time online. After growing just 5.9% from 2019 to 2020 to pass $58 billion, U.S. search ad spending grew 46% in 2021 to reach $84.7 billion – and this year, it’s expected to grow 12.4% to reach a record $95.2 billion. By 2024, digital search ad spending will approach $100 billion.

Paid search advertising has always been a competitive landscape. If your brand has the budget, you can bid strategically on keywords to dominate your product market to reach users who are interested in your brand and even appear before your competitors. In 2021, it became even more competitive as paid search cost per click (CPC) skyrocketed for the second year in a row. Google Ads CPCs grew 15-25% in 2021 and are expected to rise 20-40% in 2022.

The amount of paid search CPC growth varies by industry. In 2021, CPCs for search ads ranged from $1.40 to $8.67 across different categories, with legal services ($8.67), dental services ($6.49), and home & home improvement ($5.75) ranking as the most expensive categories. Sports & recreation ($1.73), arts & entertainment ($1.60), and travel ($1.40) were the least expensive.

As of Q3 2021, the beauty industry was the most impacted with a 41% year-over-year rise in CPCs, followed by home & garden at 33%, apparel at 24%, and electronics at 21%.

The growth in paid search CPCs could explain why PPC advertising is less of a focus this year for brands that make less than $10 million in annual revenue. Conversely, it’s the top initiative for brands with $100M-$1B in annual revenue.

Tying It All Together

ROI Revolution’s digital marketing experts have been delivering successful PPC strategies for over 20 years. In fact, paid advertising was the first service we offered alongside the launch of Google AdWords! Now, in addition to multiple other services, we manage over 400 paid search accounts and help our clients grow paid advertising revenue by 60%+ on average within one year. Want to see what we can do for your brand? Connect with our team today to uncover new revenue-driving paid search opportunities.

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