2008 Press Releases

Covario Launches Industry's First Analysis Series on Global Advertiser Search Spending Trends

Inaugural research effort discusses patterns in paid search advertising spending of high-tech companies by region, search engine and keyword pricing for 128 global brands in Q1’08 vs. Q1’07

Date: 6/24/2008

New York and San Diego Covario, Inc., the leader in interactive marketing analytics, today announced at the Forrester Financial Services Forum the launch of Covario’s “Global Search Spend Analysis”, a quarterly series focusing on the search spending habits of global advertisers.  The inaugural analysis, also released today, shows patterns in paid search spending by region and by search engine, as well as trends in keyword pricing for major high-tech brands in a comparison of Q1 2008 versus Q1 2007. The most striking finding is a 52 percent Year-over-Year (YoY) increase in overall paid search spending among these brands, as compared to industry benchmarks of approximately 20 percent.

The initial analysis also discovered a number of interesting trends about the 128 brands analyzed, including the following highlights:

Trends by region

  • The majority of growth has been in North America (Canada, Mexico and US) where percentage of total spend for the analyzed brands has increased from 58 percent in Q1 2007 to 63.5 percent in Q1 2008.

  • This growth in paid search ad spending came from budget allocation to Europe, Middle East and Asia (EMEA), which decreased by more than 10 percent YoY from Q1 2007 to Q1 2008 (33.7 percent to 22.9 percent YoY).
  • The other major gainer from a spend standpoint was Asia Pacific (APAC) — specifically Japan and China. Spending increased from 8.2 percent of budget to 11.7 percent.

Trends by search engine

  • Google continues to lead with 85.6 percent of the North American ad spend, an increase of more than 10 percent from Q1 2007. The increase was largely at the expense of Yahoo, for which the spending share decreased by 12.4 percent.

  • In EMEA, Google’s dominance is even stronger on a pan-continental basis – 94.2 percent of all paid search spending by the brands analyzed in EMEA was through Google! This is largely due to the consolidated platform the network offers. Yahoo’s Panama product, which had phased rollout during 2007, has yet to allow the ease of ad placement that Google does.

  • APAC exhibited a similar pattern with Baidu, which “dominates” the Chinese search market. However, its lack of an English language interface has prevented many large US-based brand managers from using the platform and the brands analyzed in this research actually reduced spending on Baidu by 9.8 percent YoY.

Trends in keyword inflation

  • Another point of interest unveiled by this report deals with “keyword inflation” – Cost-Per-Click (CPC) advertisers must pay inflated rates on keywords in order to drive the same amount of traffic from the same keyword set. This is a result of ongoing competition for the same words, and the auction process, by which these CPCs are set, becoming more competitive.

  • Covario has uncovered a reverse trend for the major brands analyzed in this research with an average CPC deflation for Baidu, Google and Yahoo at $0.11, from $0.97 to $0.86, respectively, over the past year. That is, click-through rates for Covario clients from Q1’07 to Q1’08 stayed relatively constant (approximately 2 percent) yet the CPCs when down by 12 percent. This is a tribute to the value proposition of the system.

  • This trend can be attributed to the fact that the brands analyzed are Covario customers, and by using Covario’s measurement and monitoring technology have better selection of keywords, based on profits.

“We recognize the importance of presenting our customers with data and information that will enable them to do their jobs effectively and profitably,” said Russ Mann, chief executive officer at Covario. “This new series, which will be updated and released quarterly, will present them with a unique perspective into global spending trends and performance across multiple brands, geographies and search engines.”

This analysis leverages the advanced analytics of Covario™ Paid Search Insight and the paid search advertising data for major global brands at more than two dozen of the world’s largest advertisers including Adobe, Intel, Hewlett-Packard and Research In Motion (RIM) to determine global spending trends and performance.       

Leading the effort for the Global Search Spend Analysis series are Dr. Matthias Blume, chief analytics officer and Craig Macdonald, vice president of marketing and product management. Prior to joining Covario, Blume was a principal scientist at Fair Isaac Company and has over two decades of expertise in developing analytic technology. Currently, he is responsible for helping Covario’s large advertiser clients better mange cross-media optimization. A former analyst at firms such as META Group (acquired by Gartner, Inc.), Macdonald is responsible for the strategic direction, product development and marketing for Covario. He has an extensive track record of leading strategic initiatives within the technology industry.

Additional findings are available in Covario’s Global Search Spend Analysis Vol. 1 (Q1 2007 to Q1 2008).
To request a copy, please contact Covario_Team@jhg.com.

 

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About Covario, Inc.
Covario, Inc., formerly known as SEMDirector, is the leader in interactive marketing analytics (IMA) software. The Covario portfolio provides global organizations with robust interactive and search marketing analytics solutions for display advertising, paid search advertising and organic search engine optimization across the enterprise and throughout the channel. Covario enables complex and distributed organizations to control brand integrity, ensure budget transparency and deliver quantifiable results across business units, distribution channels and languages.

Headquartered in San Diego, Covario’s growing customer list include some of the world’s best known brands in high tech manufacturing, financial services, electronics, media and publishing and consumer packaged goods, such as Intel, Hewlett-Packard, Lenovo, iVillage – a division of NBC Universal, and AIG among others. For more information on Covario call 858.397.1500 or visit http://www.covario.com.

For more information on the Covario call 858. 397.1500