Paid Search Spending Ends 2010 With Strong Growth in APAC and EMEA

With the year over, it is time to update the analysis of the key trends across the globe in paid search advertising, and update advertisers on Q4‘10 performance.

  • Q4’10 spending was up 8% over Q3‘10.  However, growth was up a whopping 45% in APAC and 31% in EMEA, but only a tad over 1% in the Americas.
  • On a full year basis, growth in  2010 for paid search globally was up 26% over 2009 spending. This was stronger than expected at the beginning of the year, when we predicted 14-18% growth.  Q3‘10 was a surprise, with VERY strong growth.  Year-over-year growth in the Americas was 23%; in EMEA it was up more than 22%, with APAC up 53%.

The chart above shows how global spending has increased since 2007

As expected, Google continues to dominate with global market share of 78%.  Google’s paid search growth for 2010 was up 18% globally from 2009, while Yahoo was up 34% and Bing was up 84% over last year.  Of special note is Baidu of China, which had growth of 211% over 2009.

There were three key growth drivers for paid search spending in 2010.

  • Google Instant is having a positive impact on growth for Google, which is benefiting from a larger proportion of all clicks being transferred from natural search to paid search as a result of the mechanics of the system.
  • For Baidu, Google’s repositioning of its system in Q1‘10 caused a major shift in the market share in the China market. For Covario clients in China, Baidu now enjoys more than 80% of all paid search spending in that massive, fast-growing market – and it does not seem like this is going to change anytime soon.
  • Bing-Yahoo completed its integration in the U.S., and this has driven increased spending on the combined platform overall.

All of this information is available in our latest report – Covario’s 2010 Global Paid Search Spend Analysis.   Now available on our website.

With the close of 2010 and a review of key trends looking forward in the New Year, there are some critical planning  and budgeting assumptions advertisers should take into account for 2011.

Actionable Insight 1:
Paid search spending in 2010 was up nearly 27% from 2009.  We recommend that advertisers plan for budget increases of 15-20% in 2011 for paid search — 10-14% in the Americas, 25-30% in EMEA, and 30-35% in APAC.

Actionable Insight 2:
Advertisers MUST plan on allocating budget to Facebook as part of their digital advertising media mix in 2011.  We recommend allocating 10-20% of the global paid search budget to Facebook.  The incremental spend for Facebook should come from the display budget, reducing it by a proportional amount; the paid search budget outside of Facebook spending should remain intact.

Actionable Insight 3:
Google ended the year with 78% of the global paid search market share.  We predict that in 2011 Google’s market share will contract slightly (76-78%), due to limitations on international growth.  Baidu will expand its market share above 80% in China.  Bing-Yahoo will command 15-17% of global market share.