Paid Search Slows In Second Quarter – But on Track for Yearly Growth

Spending on paid search advertising was down by 11% in Q2’11 from Q1’11. The reduction in growth is the result of a couple of key factors. First, most high-tech and consumer electronics advertisers with whom we work have fixed budgets for the first half of the year. Particularly in the consumer electronics vertical, where we saw higher than expected spend rates in the first quarter, particularly in January and in the U.S. This is due to an extended holiday sales period for computing devices, telecommunications equipment, etc. Growth in Q1 was abnormally high, causing a necessary pull back in the second quarter given the fixed budgets most advertisers have. Second, macro-economic factors are hitting spending in Europe. We are seeing a true drawdown in the region in economic activity.