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Small Businesses Adopting Paid Search Advertising At Faster Rate

Search Engine chart

It appears small businesses have become more comfortable with paid search advertising. The average small business spent $2,149 on search advertising in Q4 2009, up 30% sequentially and up 111% compared with the same quarter in the prior year.

That's according to a report released earlier this week by search marketing firm Webvisible that  examines trends among WebVisible's U.S. advertisers from Q4 2008 through Q4 2009. It represents nearly $22 million in U.S. small business advertiser spending in Q4 2009 from more than 12,000 individual advertisers. Also included in this report is an analysis of Q4 2009 data from more than 10,000 advertisers in the United Kingdom.

Some of WebVisible's clients in the United States began to move a portion of their search engine budgets to Ask in mid-2009, which resulted in a share of spending increase of 4.5% for Ask from Q3 2009 to Q4 2009. Google automatically syndicates its ads to Ask, but advertisers can take advantage of Ask's lower CPC by directly advertising on the engine, the report explains. As a result of this manual change, share of spending on Google dropped by 4.5% in Q4 2009 over Q3 2009.

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For Yahoo Search and Bing, the share of advertising spending didn't change in Q4 2009, compared with Q3 2009.  Yahoo Search accounted for 26.4% of total budgets, while Bing accounted for 10.5%. Bing's share rose 0.8%  compared with the prior year, while Yahoo's share fell 6.6%.

The majority of the small businesses advertising with WebVisible choose to include a call tracking number in their ads, and many track clicks with options that can include a custom landing page, email forms, and videos. During Q4 2009, 3.9% of clicks resulted in a call for those advertisers who had a call tracking number fell 0.6% sequentially, but increased 0.8% from the prior year.

The percentage of clicks that converted to a Web site action, which include sending an email or SMS, filling out a form, printing driving directions, or viewing a video, rose 3.3% in Q4 2009. From the prior year, that percentage rose 8.7%.

Click-through rates (CTRs) improved steadily on all engines for small businesses in 2009. CTRs on Google in Q4 2009 reveals 32% year-on-year improvements; Yahoo rose 123%; and Bing, 109%. Google showed minimal improvements, up 2.5%, sequentially, while CTRs fell 23% on Yahoo and 3.3% on Bing. The report highlights how Bing's higher CTRs points to benefits for small businesses from the imminent Microsoft-Yahoo search deal.

When I asked Kristen Managers, Webvisible chief executive officer, if small businesses are more open to investing in paid search ads on Bing and Yahoo, she told me "everyone wants to be 'on the Google,'" but small companies are open to test services from Bing and Yahoo. "We're trying to teach small businesses to remain agnostic," she says. "You shouldn't care where a lead comes from as long as it's viable and converts."

Paid search ad conversion rates improved significantly for small businesses in Q4 2009, with 35.3% of clicks resulting in Web site conversions, compared with 32% sequentially and 26.6% in the same quarter in the prior year.

Webvisible places ads for more than 10,000 small businesses in the United Kingdom. On average, these small businesses allocate less than one-tenth of  the amount  U.S. small businesses spent in Q4 2009, about $183 per U.K. advertiser, compared with $2,149 per U.S. advertiser.

Interestingly, small businesses in the U.K. bid on fewer keywords, on average 26, compared with 67 per U. S. advertiser. In the U.K., Bing leads with the highest CTR because traffic only gets served on Microsoft sites, while Yahoo has the lowest CTR due to its wide network of syndication partners, according tostudy findings.

Search engines CTRs vary less in the U.K., compared with the U.S. CTRs on Bing came in at 175% greater than Yahoo's in the U.K, compared with 276% in the U.S. It also cost less for U.K. small businesses to advertise on search than their U.S. counterparts. In Q4 2009 for U.K. companies, CPCs cost one-fifth of those in the U.S., even taking into consideration currency conversions. Similar to the U.S., Google commanded the highest CPCs among the engines, while prices on Yahoo and Bing were nearly equal.

1 comment about "Small Businesses Adopting Paid Search Advertising At Faster Rate".
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  1. Jon Fox, May 27, 2010 at 10:29 a.m.

    It's interesting to see the steady growth of ask.com in this article, I belive it is true that everyone wants to be on the Google, but it really doesn't matter where your sale came from. Just keep track. I'm glad to see these business trying other things.

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