• by Jack Loechner , Staff Writer @mp_research, October 17, 2011

According to a recent release from IgnitionOne, online advertising saw strong spend growth globally in the third quarter, in spite of global economic challenges worldwide, with spend up 10% YOY, excluding Asia.

In Q3, total search spend was up 7.2% YOY driven in part by more consumer search activity (impressions up 22%). Europe saw 20% spend growth YOY compared with 7% for the US. Growth in retail, finance and auto was partially offset by modestly lower YOY spends in travel. Retailer spend was particularly strong, growing 22% year-over-year.

US paid search advertising spend grew 7% year-over-year in Q3 2011 and 4% quarter-over-quarter. This compares with 6% year-over-year growth and 3.5% quarter-over-quarter growth in the same quarter last year. .

Retailers saw the largest growth in advertising expenditure, increasing search budgets by 22% compared with the third quarter 2010, but ROI declined as consumers cut back on spending. Conversion rates and average order values were down throughout the quarter compared with the same time last year.

Performance-focused advertisers continue to increase their display advertising budgets (spend up 21% YOY), namely for inventory sold via real-time bidding (RTB). This form of display advertising is similar to search in that it is bought in an online auction marketplace, and therefore highly measurable with spend able to be quickly scaled up or down. CPMs on RTB display are also declining (-23% YOY) as more inventory floods the market, increasing its cost-effectiveness.

Advertisers have gained a greater understanding of RTB and its value. Similar to search, it’s easily managed and budgeted for, and relatively cheap and efficient (high ROI) as compared to more traditional display. This has also increased demand.

Google’s DoubleClick Ad Exchange continued to see strong growth, with advertising spend up 184% year-over-year.

The report says that Q4 2011 search budgets will continue to grow at a 12% to 15% rate. Historically, during the extended holiday shopping season, rising conversion rates and AOVs have allowed advertisers to naturally expand their budgets to capture the increased demand.

It is also anticipated, says the report, that performance display advertising will continue to see healthy gains as more advertisers become comfortable with new forms of buying (RTB) and targeting display.

Even if consumer spending remains weak, concludes the report, the continued adoption of digital commerce (impression growth) will cause YOY budgets to increase. Significant upside to these estimates, though, can be expected if consumer sentiment strengthens during the quarter and especially if consumers regain confidence during the crucial post-Thanksgiving holiday period.

For additional information included in the report, please visit here. Or, for the PDF file of the data, with charts, please go here.