Yet Still Tracking for Strong Year Due to Hyper Q1 Growth and Larger APAC Investment
SAN DIEGO, July 8, 2011 — Covario, Inc., one of the nation’s leading independent providers of search engine marketing solutions, today issued its quarterly Global Search Advertising Spend Analysis, which found that second quarter growth in paid search ad spending among a selection of high-tech and consumer electronics companies slowed to 7 percent versus the same period last year.
Spending on enterprise PPC (pay per click) advertising was down 11 percent from the previous quarter, which saw heady 26 percent growth over the recession-plagued first quarter of 2010.
The quarterly analysis attributed the slowdown to advertisers’ robust first quarter spending against fixed first half budgets, leaving less to invest in paid search in the second quarter – particularly in the U.S. where year on year spending for the quarter was down 5 percent.
The analysis also noted the detrimental effect of the troubled economic situation in Europe, where second quarter growth – while still in double digits – was down to 15 percent. Paid search spending growth by high-tech advertisers in Europe had been trending around 25 percent for the past three quarters.
Nevertheless, Craig Macdonald, chief marketing officer of Covario, said the firm maintains its 15-20 percent annualized growth forecast for worldwide paid search spending in the technology sector.
“We continue to see creeping inflation in CPCs (cost per clicks) in paid search globally,” Macdonald said. “Plus, growth in the Asia/Pacific region continues to be very strong, where we expect year over year PPC spending to grow 40 percent-plus in 2011.
“Though spending by advertisers was slow in Q2 compared to Q1, year to date PPC spending continues to be right where we predicted at the beginning of the year and should still fall within our 15-20 percent forecast,” Macdonald said. “However, the regional allocation is going to be different than what we expected with a much larger percentage now going toward APAC.”
On a search engine basis, the study found that advertiser spending on the Google platform was down 11 percent globally from the first quarter and up just 4 percent from the second quarter of 2010. Spending with the Bing-hoo alliance was down 21 percent from the first quarter and 12 percent from the second quarter last year.
China’s Baidu, on the other hand, had 176 percent growth year over year in the second quarter. On a global basis, Google still has a commanding 75 percent market share lead overall. Bing-hoo has 19 percent of the worldwide market and fast-growing Baidu now stands at 5 percent.
“We recommend that global advertisers now plan on PPC spending increases of 40-45 percent for the Asia Pacific market in 2011,” Macdonald said. “Chinese market investments should favor Baidu with 80 percent of the budget and Google at 20 percent.”
As for the continued rise in CPCs, the analysis cited four key factors, including:
- Google Instant driving up CPCs on the network; Spending increases for relatively high priced “generic” keywords (e.g., “laptop,” “cell phone,” “tablet,” etc.);
- Bing-hoo optimizations setting a slightly higher CPC bar than the combined weighted average of the past CPCs on the separate Yahoo and Bing engines; and Rising Baidu CPCs due to market opportunity and spending increases in China.
The Covario Global Search Advertising Spend Analysis encompasses all of the major search engines and is based on paid search spending by the company’s high-tech and consumer electronics clients. This is the fifth year of the analysis, which spans the first quarter of 2007 through the second quarter of 2011. Covario clients represent about $400 million in annual paid search programs conducted on various search engine platforms in more than 45 countries. All of the data was compiled using the Covario Paid Search Insight™ software solution.
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Covario, Inc. is among the nation’s largest independent SEM (search engine marketing) and SEO (search engine optimization) providers, offering SaaS-based software systems and digital marketing agency services. The San Diego-based firm offers global enterprise solutions for paid search advertising, organic search marketing, social media integration, display advertising, and cross-media attribution analysis. The company’s growing customer base includes some of the world’s leading companies in technology, consumer electronics, retail, ecommerce, financial services, media, entertainment, publishing, and consumer packaged goods. More information about Covario is available by calling 858.397.1500 or online at http://www.covario.com.