Paid-Search Advertising Becoming Ticket For Small Business

Kirstin Mangers

Small businesses in jewelry, loans, mortgages and recruitment services significantly increased spending for search engine marketing and advertising in Q2 2010.

Loan companies spent 25% more sequentially in the second quarter, followed by mortgage companies at 23.9%; jobs and recruitment, 14%; and travel, 8%, according to the State of Small Business Online Advertising Q2 2010 report released this week.

The average small business supported by Irvine, Calif.-based WebVisible spent on average $2,231 -- up 160% compared with the year-ago quarter, but just 1% sequentially. Another sign that the medium continues to build momentum: 43% of all clicks resulted in a Web conversion in the second quarter of 2010, up 39% from the year-ago quarter, and 22% sequentially. This tells WebVisible that consumers want information about local businesses, says WebVisible CEO Kirstin Mangers.

Mangers doesn't see the uptick as an indicator that small businesses believe they must advertise online, but rather a signal that the economy slowly continues to turn around as more jobs become available and consumer confidence levels start to rise.

Click-through rates (CTR) in the second quarter of 2010 on all engines improved year-on-year, but Google and Bing declined sequentially. Google CTRs rose 28%; Yahoo 46%, and Bing 15% in the quarter, compared with the prior year. Google and Bing declined slightly, sequentially, from the first quarter of 2010, with Google's CTR declining to 4.4%; and Bing 6.6%. Yahoo's CTR improved by 35%, compared with the prior quarter.

The average keyword count per advertiser also continued to increase for WebVisible's small business advertisers in the first quarter of 2010. Keyword inventories consisted of an average of 75 root keywords, compared with individual bids with geographic modifiers in Q2 2010 -- a 39% increase over Q2 2009, according to the report.

Paid-search share shifted toward Yahoo in Q2, as WebVisible's platform looks for the best-quality traffic at the lowest price. "This would suggest we're getting higher conversion rates and lower CPCs to buy traffic more effectively," Mangers says. "The same thing is applicable in the U.K. Yahoo's less noisy than Google for local companies. It's easy to be seen and easier to compete at a lower rate, so it's converting higher."

Market share shifted a bit in the second quarter of 2010. Advertisers spent 15% more on Yahoo in the second quarter compared with the prior quarter, gaining 4.1 percentage points in share -- and 23.5%, gaining 5.7 percentage points in share, compared with Q2 in the prior year. Google lost 2 percentage points in share in the second quarter of 2010 sequentially, to 3.4% share, but year-on-year declined 5 percentage points to 6.8%. Bing's share of spending dropped 5% from Q1 2010, and 6.8% from Q2 2009, according to the report.

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