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.