Sorting Through Q2 2010 Paid-Search Data

A flurry of paid-search reports released Tuesday may have marketers' heads spinning, but each provides insights into specific parts of the process. Marketers that want to track consumer ad clicks want to look at data from comScore or Experian Hitwise. The data firms track consumer actions, but not what advertisers and marketers spend to serve up ads; whereas AdGooroo tracks impressions; and Covario, Efficient Frontier and SearchIgnite, what happens after consumers click.

Google sites led the U.S. search market in June with 62.6% of searches, followed by Yahoo sites, up 0.6% points to 18.9%, and Microsoft sites rose 0.6% points to 12.7%, according to comScore data released Tuesday. The data firm attributes Yahoo and Microsoft gains, in part, to contextual search that ties together content and related search results. Ask Network captured 3.6% of the search market, followed by AOL with 2.2%. Unlike comScore which monitors search queries, SearchIgnite monitors when consumers click on ads, but also the price of ad calls, what consumers do on the Web site, and whether the purchase produced positive returns for the advertiser.



Increasing conversion rates by 1% or improving ROI and media spend by 3% can create a huge swing for profits, says Roger Barnette, chief executive officer at SearchIgnite, which supports companies spending more than $200,000 on paid search monthly.

SearchIgnite released the Q2 2010 U.S. Search Market Report Tuesday. Year-over-year paid-search spend increased 14% in the U.S., following an 11% YoY increase, sequentially.

Similar to Efficient Frontier's report, SearchIgnite found retailers spent more -- about 7% -- compared with the prior year. Microsoft's search engine Bing gained market share by 26% from the year-ago quarter, but declined 9.6% sequentially. Overall, Bing dropped slightly to 6.2% share of search spend in the U.S., while Google and Yahoo reached 78.4% and 15.4%, respectively.

Enter keywords on a search box on an engine and about 70% of the ads clicked occur on paid-search ads serving up in the first page. The search firm AdGooroo released Q2 2010 findings that suggest the number of first-page advertisers on Google rose 7.3%, but only 2.8% for both Yahoo and Bing. The numbers reflect Google took a slight slice of advertiser share, which remains steady at about 80% for the past 18 months.

Google increased the average number of paid-search ads shown per search session by 15%, followed by Yahoo at 22% and Bing at 11%. More premium ads in sponsored listings and down the right rail don't necessarily suggest good news, however. Increasing ad coverage can diminish returns, and result in a poor experience for consumers, according to the report.

Relying on Google for metrics, the report suggests that consumers can withstand between 5.5 and 6.0 ads per search query. Yahoo now serves up 6.85, making it unlikely the increase in ads will lead to additional revenue. Bing serves up about 3.85 ads per keyword, so it's "extremely" likely that this will reflect in better-than-expected revenues for the search engine. Similarly, Google went from 4.97 to 5.72, so they could report healthy increases as well.

AdGooroo Chief Executive Officer Rich Stokes says advertisers can benefit from these Bing numbers by having a little more access to inventory.

Stokes also points to Google's MayDay update, with changes to the organic search rankings algorithm intended to improve the relevance of long-tail searches by eliminating auto-generated content from the search results. Not only did AdGooroo confirm that many auto-generated sites were largely removed from Google's index, but that Google now monetizes nearly 8% more of their keyword searches. Stokes says keywords searched with no ads decreased from 43.6% in Q1 to 39.7% in June, making the inventory easier to monetize.

Marketers focusing on high tech, especially international paid-search campaigns, might want to dig into data from Covario. The San Diego search marketing firm issued its quarterly Global Search Spending Analysis report, which suggests that paid-search advertising among high-tech and consumer electronics companies rose 35% compared with the year-ago quarter and 16.5%, sequentially.

In the Americas, paid-search spending by tech companies increased 12% during the second quarter, while the Asia/Pacific region rose 33%, sequentially. Combined, spending in Europe, the Middle East and Africa grew 25%. Google's China strategy and move to serve content from Hong Kong has influenced performance. During the second quarter, Google's share in the region dropped from 69% to 61%, while Baidu's share of paid-search spending rose to 22% from 12%, sequentially.

Yahoo's global market share grew to nearly 15% in Q2 2010, including a 34% quarter-over-quarter increase in the Americas and a 26% spend increase for Yahoo Japan. The analysis also found that Bing had a 15% drop, marking two consecutive quarters where global spending on the Bing network decreased from the previous quarters.

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