Paid search is a channel in constant upheaval. At no point since AdWords launched has there been a period without huge change, and the coming years will be no exception. Here are the three trends that are set to shape the future of paid search.
Mobile search takes on a new significance
Several of the upcoming trends (especially the ones we're most confident about) are those already taking place. Search traffic is shifting to mobile devices. That's an old story, but one that has recently taken on new significance. Google recently announced that in ten markets around the world mobile query volume has passed desktop query volume, and across Dentsu Aegis Network clients on aggregate, paid search clicks from mobile devices are now higher than those from desktops.
This impacts costs of media and attribution capability. CPCs on mobile devices are still dramatically lower than on desktops, and will remain so for some time. Mobile and desktop CPCs are both rising, but as traffic shifts towards the lower cost devices, the average is still being pulled down, even as actual costs on each device go up.
The inflection point on this trend will happen before CPCs equalise: If both channels are growing, we need to reach a level at which the traffic shift slows to a pace below the cost growth. In the UK market this will happen sooner than elsewhere in the world (where desktop penetration is lower, and internet access via smartphones is still rising), but efforts from Google will attempt to accelerate the volume of mobile queries.
Voice search, search on devices, and predictive search are all currently un-monetised (and in some cases keywordless), but as with all Google products will be monetised eventually. As a result we expect several years of depressed overall CPCs while the mobile shift continues to happen faster than the CPC rise.
The second major effect of mobile shifts is perhaps less welcome: mobiles are still an upper funnel device. Mobiles take an earlier position in users' paths to conversion. Whether it is due to trust, privacy (mobile interactions are more likely to be in a public space) or convenience, checkout rates on mobiles are lower. Users will switch from their mobile device to a desktop to complete conversions. They may return through the same search, through a brand search, emailing/saving a link, or simply via a direct website visit, but that return is more likely to be on a desktop device to convert.
Since mobiles have overtaken search volume and importance, but desktops still act as a conversion vehicle, the next few years will see a continued shift from "mobile first" thinking to "desktop second" thinking. That legacy device and the shift between devices will make accurate tracking of campaigns nearly impossible. The trackability of PPC has been one of its defining characteristics, and a reason it has been so easy to assign budgets to paid search. Without that in its favour, advertisers will look for other ways to prove value, and many without adequate technology and strong assumptions may see their search investment decrease.
Google introduces verticals for better targeting
Outside of the shift to mobile, we expect to see Google launch several sets of vertical-specific products. Again this is a trend that has already begun with the launch of Google Shopping, Local Inventory Ads, Automotive Ads, Hotel Finder and Google Compare, but the opportunity to target large advertisers in industries that find it complex to maximise PPC advertising will give Google more incentive to keep going.
Over the next five years we expect large advertisers to reach an equilibrium with well over half their paid search budgets invested in vertical-specific products, each with their own unique and compelling ad formats.
Location-aware search is currently untapped by Google, but those will become huge draws for local advertisers. Projects like local inventory ads (and Google My Business) will combine closely with predictive and contextually aware technologies like Google Now. As an advertiser, expect to be able to target a user near your location, featuring a product their search history shows they have an interest in, directly on their notification-driven wearable device. Just like a "buy milk" reminder, the impulsive nature of these uses of keywordless predictive paid search reduce the barrier to purchase, and improve the trackability of online to offline purchase paths.
Strategies like these make paid search advertising far more complex. With targeting and creative signals including keywords, locations, devices, time, day, demographics, browsing history and more it will become untenable to create a campaign targeting the right users at the right time, since too many signals will be available.
New technology introduced to manage paid search
Paid search management technology will undergo a wholesale shift. It may be driven by DoubleClick or Marin, or it may be changed by a new entrant (who will likely be acquired by one of the former), but expect to see paid search automation revolutionise campaign creation. Search strategies will be created by humans understanding user profiles and compelling creative, then individual overlapping data-driven targets will be put together by the systems, and templated creative will ensure the most personalised ad message to the user's context.
Five years is a long time to make predictions about a channel that changes wildly every nine to twelve months, but there are strong trends we're still at the start of, and new developments are inevitable over the next few years that will put mobile, cross device, context-aware and data-driven campaigns on vertical specific products into the hands of all advertisers, created by humans and built by technology.