Global search spending continues rise but Google is being pegged back says Covario

We hear a lot about online this and that these days but good old search remains the mainstay (for Google anyway) and continued its inexorable rise in the last quarter of 2011 according to a survey by independent search marketing agency Covario.

The agency reports that spending for paid search advertising by the firm’s high-tech and consumer electronics clients increased 21 per cent in 2011 over the previous year, slightly above the company’s original expectations of 15 to 20 per cent growth for the year.

The quarterly Covario study found that robust holiday PPC (pay-per-click) advertising in the consumer electronics sector led to a fourth quarter rise of 28 per cent in search spending compared to the fourth quarter of 2010. Global search spending in the fourth quarter was also up seven per cent over the previously strong third quarter of 2011.

Among the major search engines, Google continued to dominate the paid search scene in 2011 with global market share of 76 per cent (down two per cent from the previous year), with annual spending growth of 27 per cent over 2010. Global paid search spend on the integrated Bing/Yahoo platform was down 18 per cent from the prior year. Baidu, which dominates the Chinese market and the Asia/Pacific region as a result, stood out with annual growth of 185 per cent over 2010.

Regarding the global cost competitiveness of the seven largest search engines, Covario CEO Russ Mann says that the fourth quarter of 2011 was the first time since mid-2010 where the trend toward higher CPCs (cost-per-clicks) was broken.

“Global advertisers appreciate that CPC inflation is taking a breather,” says Mann (pictured). “This shift appears to be due to a fundamental change in search behavior by consumers, who are now further along in the conversion process by the time they initiate an internet search. In addition, advertising strategies are more effective than ever and the search engines have improved their matching algorithms, resulting in more relevant query results for consumers and greater cost efficiency for advertisers.”

Looking ahead through 2012, Covario says that global advertisers need to increase paid search spending by 18 to 22 per cent overall to maintain market share – 18 to 20 per cent in the Americas, 15 to 18 per cent in EMEA, and 40 plus per cent in the Asia/Pacific region.

“Asia/Pacific continues to be where the major growth opportunities exist for global search marketers in the high-tech industry. The economies in North America, led by the U.S. and Canada, are also stabilizing and are poised for stronger growth in 2012. On the other hand, growth in search spending in Europe will further decelerate due to the macro-economic slowdown and political unrest in the region,” Mann says.

The Covario Global Search Spending Analysis encompasses all of the major search engines and is based on worldwide paid search spending by the firm’s high-tech and consumer electronics clients. This is the fifth year of the analysis, which spans the first quarter of 2007 through the fourth quarter of 2011. Covario clients spend about $400 million in annual paid search programs conducted worldwide.

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