Consumers who clicked through a paid search ad generated 27% more sales for e-retailers during the first quarter of 2012 compared with a year earlier, according to a paid search index prepared exclusively for Internet Retailer by PM Digital, a search engine marketing firm. The index measures paid search performance quarterly and is based on data from more than 50 large retailers that are clients of PM Digital.

The average value of orders made following a consumer’s click on a paid search ad increased 3% during the quarter versus a year ago, whereas the cost marketers paid for each click declined 3%. The combination of cheaper clicks and greater order values means paid search investments generated better returns for marketers, PM Digital says, and those returns drove more investment in paid search. Paid search spending increased 15% during the quarter versus a year ago. 

PM Digital does not report the actual dollar amount spent by retailers tracked by the index. All online advertisers spent approximately $14.8 billion on paid search ads last year, accounting for nearly 47% of online ad spending, according to the Interactive Advertising Bureau, a trade group for online marketers.

The largest increase for revenue driven from paid search during the first quarter occurred in March, when revenue rose 29% on a comparable year-over-year basis, according to PM Digital. That’s true even though revenue rose 32% in February, because this February had an extra day of sales data available thanks to Leap Day, Feb. 29. When Leap Day data is excluded, the year-over-year increase for paid search-driven revenue in February was 26%.    

February did lead the quarter in the year-over-year growth of conversion rates for consumers who clicked on a paid search ad and then made a purchase with the e-retailer. February saw a 12% increase in conversion rates, followed by 9% in March and 6% in January. PM Digital attributes the spike in conversion rates in February to the flurry of e-retail promotions for Valentine’s Day and President’s Day.  

Craig Handelsman, chief information officer at e-retailer CentralVacuumStores.com, will explain how he improved his paid search campaigns to attendees at the Internet Retailer Conference & Exhibition 2012 in Chicago in June during a session titled “Shifting a paid search campaign into overdrive with new Google tools.”