A new report from Efficient Frontier shows that Google accounted for 77% of total search spend in the first quarter of 2008.
Return on investment (ROI) on Google improved by 24%, click-through rates (CTRs) improved by 19%, and cost per click (CPC) rates increased by 11% in the period between Q1 2007 and Q1 2008, suggesting that large-scale advertisers are benefiting from Google’s quality updates and can continue to afford its higher CPCs, particularly given the increase in ROI.
Advertisers on Yahoo! Search and MSN adCenter saw year on year ROI improvements of 33% and 29% respectively, but did not see increases in CTR or CPC. Yahoo! captured 18% share of total search spending in Q1 2008, losing 3.2 percentage points since Q1 2007, while MSN maintained volume at 5% of search spend.
Travel search spending was up 23% in Q1 2008 versus Q1 2007, and automotive and retail increased spending by 10% and 6% respectively.
James Beriker, President and CEO of Efficient Frontier, said: “Google’s efforts around improving the quality of search results appear to have increased the value of the search channel for the leading advertisers that we work with in all major verticals.
“Our ability to drive increasing volume while improving ROI on each of the major search engines demonstrates the effectiveness of leveraging highly evolved algorithms, scalable bid management technology, and an experienced team of search marketers in these volatile and competitive marketplaces.”
Efficient Frontier analysed nearly 18 billion impressions and more than 310 million clicks to determine how shifts in the search marketplaces impacted overall spending and campaign effectiveness.
The Search Engine Performance Report: Q1 2008 was completed based on data from a fixed sample of Efficient Frontier’s US clients from Q1 2007 through Q1 2008, and includes data from large search engine advertisers across multiple verticals as well as findings on search engine spend, CTRs, CPC and ROI.
Recent research from the IAB and PwC found that online advertising grew almost 40% year on year in 2007 to a new high of over £2.8 billion, with search growing by 39% to £1.6 billion (£1.2 billion in 2006) (see UK Online Adspend Grows Almost 40% Year On Year In 2007).
eMarketer, meanwhile, found that search-related marketing accounted for 50% of all UK online advertising spending in 2006, and 60% in 2007 (see Online Adspend To Rise 27% In 2008).
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