World’s biggest advertisers turn to search specialists but use of mobile and social experts lags behind

The World Federation of Advertisers (WFA) has released the results of its latest survey into the way that the world’s biggest advertisers organize, budget and remunerate paid search.

The first such survey since 2009 indicates that WFA members – half of those surveyed have responsibility for approximate annual digital budgets 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 reveals 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 (illustration Silicon Cloud).

The survey has been carried out at a time when WFA members are investing significantly more in digital marketing. In 2011, 40 per cent of respondents spent more than €26m in 2011 compared to 25 per cent in 2009. Spend is still significantly lower in Asia Pacific and Latin America with 57 per cent and 54 per cent investing less than €5m, respectively.

Key changes from 2009 include:
Major increases in the use of specialist search agencies: Although 55 per cent 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 per cent in 2011. 26 per cent work with a single international digital agency network (up from 17 per cent) while 39 per cent work with specialist search agencies in at least one country. None of those who responded to the survey now manage search internally, a strategy used by six per cent of respondents in 2009.

Mobile search and social search is not being specifically resourced in many cases: The vast majority of WFA respondents – 66 per cent – do not yet dedicate budget to mobile search, while 44 per cent do not devote budget to social search. Those who do devote budget to mobile search and social search allocate roughly 1.3 per cent and three per cent respectively of their search marketing budget. There are exceptions, however, and six per cent of respondents say they devote more than 20 per cent 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 per cent – fixed or output-based fees are nearly as popular with 30 per cent of respondents, up from 11 per cent in 2009. 12 per cent of respondents use more than one method of remuneration.

Most respondents use a KPI (key performance indicator) 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 per cent) and average CPC (65 per cent) followed by cost per conversion (52 per cent) and conversion rate (48 per cent). Sales come last (19 per cent), indicating that most respondents are using search marketing at early stage in proceedings, despite most also having e-commerce platforms.

There is a clear trend towards search centralisation: more than half of the respondents plan to centralize more of their search spend in the next 12 months with 68 per cent agreeing or strongly agreeing. Partly this is a response to the fact that nearly half the respondents (47 per cent) found that they were bidding against other bits of the company for the same search terms in the last 12 months. This move has also been adopted to overcome the perceived failure of agency suppliers to communicate with each other: 44 per cent cited a lack of collaboration between paid and natural search suppliers as a worrying issue.

Summing up the survey, WFA managing director Stefan Loek says: “Paid search is a powerful platform for brands and 84 per cent 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.”

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