IgnitionOne: Growth Slows For Paid-Search Spend

by Laurie Sullivan, Jun 27, 2012, 4:12 PM

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Marketers continue to allocate budgets to U.S. paid-search advertising campaigns, but growth slowed to 15.5% in the second quarter of 2012, compared with the prior two quarters. In Q4 2011, paid-search ad spend grew 22.4%; and in Q1 2012, 30.3%, according to a quarterly report that IgnitionOne will release Thursday.

Clicks also slowed to 13.2% in Q2 2012, compared with 29.1% in the prior quarter. Click-through rates came in flat year-on-year, ending an upward trend. Impressions, however, grew faster than last quarter with a 13.7% increase year-on-year, compared with 7.2% sequentially.

The cost-per-click (CPC) rose 2.1% year-on-year, but clicks on Google fell slightly to 3.1%. The IgnitionOne report points to an increasing reliance on mobile paid-search ads that support less expensive clicks, as well as new ad formats that are generally lower in price.

Yahoo and Bing experienced a 24.3% jump in CPCs, which the report suggests continues a sequential shift toward the two companies touting best practices. It has led to greater competition in auctions through the rise of broad-match keywords used as stepping stones to highlight other match types.

The report points to a shift in market share during Q2. Google holds 79% of share compared with the Yahoo and Bing alliance at 21%, representing a 1% point year-on-year uptick for the quarter. Marketers increased the ad spend with Yahoo and Bing by nearly 33% year-on-year, which tops Google's 11% growth.

Google's push toward mobile devices, as well as search and display advertising, will clearly pay off. Mobile search ad spending rose 333% year-on-year. Mobile search ads also had greater growth in engagement as clicks grew 325%, while impressions grew 130%.

On Wednesday, Google announced the Nexus 7 tablet built by and co-branded with Taiwan's Asus. It will begin shipping in mid-July starting at $199. The device, available on Google Play, will feature Google Android 4.1, Jelly Bean, along with a Nvidia Tegra 3 processor.

For Google, the Nexus 7 tablet will not only support advertisers through its search engine and affiliate networks, but also social signals from Google+, and games and books available through Google Play.

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