U.S. Paid Search Budgets Forecast To Rise 15%

Bing and Yahoo search engines will begin to gain market share in 2011 as small- to-mid-size advertisers increase budgets to begin to take advantage of potential volume and stronger return on investments on the new platform, according to the Efficient Frontier Q4 2010 U.S. Digital Marketing Performance Report released Tuesday.

The ROI metrics on the combined platform continue to bring smiles to the faces of search executives. Sid Shah, director of analytics at Efficient Frontier, says search marketers can gain nearly the same ROI on the Bing-Yahoo platform as on Google. This will prompt marketers spending about $10,000 or $20,000 monthly to pay more attention to Bing campaigns. That will help the engine increase market share.

Marketers will increase search budgets by 15% in the United States this year, compared with 2010, according to the Efficient Frontier Q4 2010 U.S. Digital Marketing Performance Report released Tuesday.

While 2010 became a strong year for combined display and social media advertising, Efficient Frontier estimates that advertisers will work harder to solve the cross-channel marketing puzzle by equipping themselves with tools to measure and monetize the impact. Those that do will have a leg up.

While market share between Q3 and Q4 2010 did not shift, Google for the year gained 4.6%. The share came from Yahoo prior to the migration to Bing. That's when Yahoo's market share fell 5%. Google gained 4% and Bing 1%.

Aside from market share for the year, Google gained 7.7% click share. The gain came mostly at the expense of Yahoo before the migration to Bing. Looking at spend and click share, it is evident that click-share losses from the Bing-Yahoo combination were offset by cost-per-click (CPC) gains.

Google's impression share improved year-on-year, while the Bing and Yahoo combination declined by 8% during the transition as Bing's algorithms were more restrictive to the type of traffic that was served by ads.

Only higher-quality Yahoo traffic was served with ads. Paid clicks on Google rose 8% year-on-year and Bing-Yahoo's clicks fell by 32%. CPCs rose on all engines year-on-year.

The monetization of the click improved quite a bit. The revenue per click around September came in at 20% worse than Google, but by the end of December the revenue per click on the Bing-Yahoo platform vs. Google was virtually identical.

As Bing and Yahoo worked to improve the marketplace, marketers took note and began bidding higher on the keywords in an effort to attract better quality traffic.

Overall for the year, marketers spent more on paid-search marketing. Spend rose 23% year-on-year, but return on investment (ROI) fell 10%, as advertisers sought greater volume at slightly lower returns.

While marketers spent 23% more in Q4 2010 compared with the year-ago quarter, return on investment dropped about 10%. Google increased market share from 75% in 2009 to 79% in 2010, but this was not because of the Bing-Yahoo integration. It occurred during Q3 when Yahoo lost quite a bit of market share.

1 comment about "U.S. Paid Search Budgets Forecast To Rise 15%".
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  1. Paul Benjou from The Center for Media Management Strategies, January 18, 2011 at 12:35 p.m.

    All signs point UP for search spending in 2011. While this article suggests a 15% rise, MagnaGlobal's report (released this morning) suggests an 11.1% increase for paid search.
    Stats show a whooping 35% increase in paid search as well during Q4 2010.

    Paul Benjou

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