Spending on search advertising in the U.S. grew 24 percent during Q2 versus the same period in 2009, according to Efficient Frontier’s latest quarterly search engine performance report.
Data aggregated from a range of the search optimization firm’s clients suggests advertisers in the retail category helped drive that growth, upping their spend by 38 percent during Q2, year-over-year, and 19 percent versus Q1. Meanwhile, advertisers in the travel and auto categories spent 10 percent and 6 percent more, year-over-year, while advertisers in the finance category spent 2 percent less.
Efficient Frontier Director of Business Analytics Dr. Siddharth Shah said the growth was well above the company’s estimations, which anticipated a year-over-year spending increase of between 15 and 20 percent. He warned of a possible slowdown in Q3 of the year, however, as continued economic difficulties in Europe may influence budget allocation for some U.S. advertisers.
In terms of market share, the report found Microsoft’s Bing engine increased its portion of U.S. spend significantly in the past 12 months, growing from 4.1 percent in Q2 2009 to 6.4 percent in Q2 2010, representing a 54 percent increase. In the same period, Google’s share has remained relatively stable, growing just 0.1 percent to reach 75.6 percent in Q2. Bing’s growth has therefore come at Yahoo’s expense, which saw its share drop from 20.4 percent to 18 percent.
Shah suggested that Microsoft’s inability to attract search spend from Google could in part be due to its search deal with Yahoo. That partnership is scheduled to take effect later this year. “Advertisers are waiting to see how the integration will work. After that, you might see a change in spending patterns or market share,” he said. “I do believe in the long run the partnership will be a big positive [for advertisers],” he added.
Despite Bing’s failure to wrestle spend from Google, the report found that advertisers using Microsoft’s product are continuing to receive greater return on their investment. The data suggests advertisers experienced 21 percent greater ROI using ads on Bing than they did on Google. Meanwhile, Yahoo performed considerably worse, offering just 75 percent of the ROI achieved by Google.
Efficient Frontier also noted a sharp increase in the amount of clicks its clients received via Google’s content network, but reported a relatively small change in the number of impressions it served. Compared with Q1, advertisers received around 28 percent more clicks during Q2, but only 2.5 percent more ads were served. As the report notes, “Google’s effort in refining the content network by showing more relevant ads appears to be paying off.”
Every year, Google's well-oiled digital ad machine generates tens of billions of dollars in revenue, making the search giant the biggest single recipient of digital ad spend.
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