The document summarizes key trends in US online advertising for the first quarter of 2012 based on an analysis of data from over 1,500 advertisers. The main findings are: 1) Advertisers increased click volumes by 37% year-over-year while keeping costs stable, indicating greater efficiency. 2) Google accounted for most search volume and spend but advertisers optimized campaigns, improving click-through rates and lowering costs. 3) Increased use of precise keyword matching improved relevance and performance. 4) Mobile and tablet advertising is growing rapidly and outperforming desktop.

1. WHITE PAPER
US Online Advertising Report
Key Trends & Insights
January - March, 2012

2. US Online Advertising Report - Key Trends & Insights - April 2012
Introduction
The first quarter of 2012 unveiled several important paid-search trends. On a year over year
basis, advertisers increased click-through-rates (CTR), while keeping overall cost-per-click (CPC)
in check. These trends point to advertisers realizing increased efficiencies from paid search,
while growing their search programs.
On the subject of efficiency, we also found that a larger percentage of advertisers were using
Phrase and Exact type of keyword matching, and realizing strong performance gains as a result.
Lastly, our data suggests that advertiser adoption of mobile and tablet devices for paid-search
advertising is accelerating and showing significantly better performance than similar campaigns
on desktop computers.
Research Methodology
To uncover key trends for the first quarter of 2012, we sampled the Marin Global Search In-
dex, which includes over 1500 advertisers and agencies that invest over $3.5 billion annually
in paid-search. The Marin Global Search Index consists of enterprise-class marketers -- larger
advertisers and agencies who spend in excess of $1 Million annually on paid-search, social and
display. As such, our data sample and findings skew towards the behavior of larger organizations
and more sophisticated advertisers.
We kept the study longitudinal by focusing on a representative set of US advertisers who have
been active on Marin for the previous five quarters, and measuring key performance indicators
(KPIs) on a year over year (YoY) and quarter of quarter (QoQ) basis. Unless otherwise mentioned,
all of the analysis in this study refers to trends in the search (versus content) network. Wherever
possible, we used medians and indexed values to more clearly highlight overall trends instead of
absolute values. This allows us to mitigate the effects of outliers, and make the findings more
representative of the performance of the typical Marin client. For Q1, we rebuilt our client index
data pool as part of an annual data refresh. This could result in slight variations in prior quarter
data that we’ve reported previously, but will make the analysis and findings more representative
as we move forward.
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3. US Online Advertising Report - Key Trends & Insights - April 2012
Findings:
1. Growth in Click Volume and Overall Performance: On an annual basis, advertisers saw paid
search click volume rise by 37% accompanied by a 21% increase in impression volumes. Im-
provements in click volume can be largely attributed to stronger CTR and a stable to lower aver-
age CPC. The combination of improving CTRs and stable to declining CPCs, point to a significant
efficiency gain for Marin’s clients over the past year.
Copyright © 2012 Marin Software Inc. All rights reserved. 3

4. US Online Advertising Report - Key Trends & Insights - April 2012
2. Improved Efficiencies on Google and Spend Increases on Yahoo! and Bing: According to
Comscore , 66.4% of all US-based search queries were conducted on Google during February
2012. During this same period, Yahoo! was at 13.8% and Microsoft at 15.3%. Despite having
66.4% of the overall US search volume, Google monetized its searches much more effectively
-- accounting for 81% of paid search spend and 82% of all paid-clicks during the same period.
On Google, the story we saw was largely about advertisers becoming more efficient. On a year
over year basis, we saw a 46% increase in clicks with impression volumes only rising 29%. Dur-
ing this time, our clients saw a 14% increase in click through rates (CTR) on Google, while cost
per click declined by 12%.
Copyright © 2012 Marin Software Inc. All rights reserved. 4

5. US Online Advertising Report - Key Trends & Insights - April 2012
On Yahoo and Bing, the story was largely about continued investment but higher CPCs. On a year
over year basis, advertisers saw 13% higher click volumes, coupled with a 32% jump in CPC
and a nominal increase in CTR.
The following charts outline how search performance characteristics differ across Google and
Yahoo! and Bing.
Copyright © 2012 Marin Software Inc. All rights reserved. 5

6. US Online Advertising Report - Key Trends & Insights - April 2012
3. Match Type Optimization Creating Significant Performance Gains: Our analysis shows that
gains in efficiency over the past year have been a result, in part, of advertiser efforts to refine
match types. Refining match types from Broad to Phrase or Exact, increases relevance and
click-through rates for keywords, thus improving quality scores and lowering costs. In the past
year, search marketers have increased their use of Exact Match, growing their click-share by 4%
while increasing share of ad spend by 1%. The following charts indicate year over year change
in paid-search metrics by match type, and demonstrates the effectiveness of Exact Match from
both a CTR and a CPC perspective.
4. Industry Specific Trends: While it’s helpful to understand the broader context of how paid
search is evolving at a macro level, the reality is that different industries can demonstrate fun-
damentally different trends. To that end, we looked at the behavior of seven different industries
and uncovered some new and unexpected trends. This section provides insights on representa-
tive values for CTR and CPC across seven verticals (Q1 2012), and industry-specific trends for
key metrics.
Copyright © 2012 Marin Software Inc. All rights reserved. 6

7. US Online Advertising Report - Key Trends & Insights - April 2012
Paid Search Trends – Auto
Paid Search Trends – B2B
7

8. US Online Advertising Report - Key Trends & Insights - April 2012
Paid Search Trends – Education
Paid Search Trends – Finance
Copyright © 2012 Marin Software Inc. All rights reserved. 8

9. US Online Advertising Report - Key Trends & Insights - April 2012
Paid Search Trends – Healthcare
Paid Search Trends – Retail
Copyright © 2011 Marin Software Inc. All rights reserved. 9

10. US Online Advertising Report - Key Trends & Insights - April 2012
Paid Search Trends – Travel
5. Device Targeting & Performance: While Desktops and Laptop computers still command the
vast majority of search spend, we are starting to see positive trends as marketers explore new
platforms to extend their reach. Device targeting, in particular, is showing promise as smart
phone and tablets become increasingly popular around the world. To provide context around
usage patterns and spend allocation, the charts below shows how click and spend share was
segmented across our client base during March 2012.
Click Share By Device - March 2012 Spend Share By Device - March 2012
Smartphones
10% Smartphones
Tablets 7%
6% Tablets
5%
Computers Computers
84% 88%
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11. US Online Advertising Report - Key Trends & Insights - April 2012
Mobile and Tablet devices accounted for 16% share of clicks and 12% share of spend during
March 2012. Growth in consumer adoption has been a strong driver of click volume growth on
these devices. Additionally, spend allocation on mobile and tablet devices is also growing very
quickly and marketers are realizing solid performance across both mobile and tablet devices.
The following chart compares click through rates and cost per click across devices during March
2012.
Click Through Rates - March 2012 Cost Per Click - March 2012
$0.76
5.15%
$0.60
$0.53
3.05%
2.21%
Computers Smartphones Tablets Computers Smartphones Tablets
While device targeting may not be relevant for all advertisers, marketers should evaluate their
target demographic, and where appropriate, leverage the performance and cost effectiveness of
targeting ads to tablet or mobile users.
Copyright © 2012 Marin Software Inc. All rights reserved. 11

12. US Online Advertising Report - Key Trends & Insights - April 2012
Conclusion
On a year over year basis, click volume increased by 37% for paid search marketers. Addition-
ally, increases in click-through rates combined with a lower cost per click on Google indicate
that advertisers have increased their efficiency and performance in the past year.
Google continued its search dominance by garnering 81% of US spend share and 82% of US
click share while controlling 66.4% of overall US search volumes. Despite falling behind in over-
all click share, Yahoo! and Bing are continuing to show growth in click volume and cost per click.
The past year has also seen advertisers improve efficiency by increasing usage of exact and
phrase match keywords. Tools such as Marin greatly simplify the process of keyword expansion
and automated bid calculation for large keyword sets, and enable search marketer to focus on
more strategic objectives such as keyword refinement.
Lastly, we found that tablet and smart phones, while still in early stages of adoption relative to
desktop computers, are showing strong and accelerating gains in search share, while delivering
quality performance with higher than average Click Through Rates. As these devices become
more widespread, and marketers develop smarter targeting strategies, we expect to see an ever
increasing percentage of ad spend funneled towards smart phones and tablets.
Copyright © 2012 Marin Software, Inc. All rights reserved. 12

13. US Online Advertising Report - Key Trends & Insights - April 2012
About Marin Software
Marin Software is a leading provider of online advertising management solutions, offering an
integrated platform for managing search, social, display, and mobile marketing. The compa-
ny provides solutions for advertisers and agencies, enabling them to improve financial perfor-
mance, save time, and make better decisions. Marin Enterprise, the company’s flagship product,
addresses the needs of online marketers spending at least $100,000 per month on biddable
media. Marin Professional delivers the same power and ease of use as Marin Enterprise, through
an application designed for marketers spending less than $100,000 per month. Headquartered
in San Francisco, with offices worldwide, Marin’s technology powers marketing campaigns for
over 1,500 customers managing more than $3.5 billion of annualized ad spend in more than
160 countries. For more information, visit: www.marinsoftware.com.
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