By all accounts, paid search spending rose in Q1 2012 as compared to the previous year, but by how much depends on the source, and the sector.
Covario, which serves mostly high-tech clients, says paid search in the Americas grew 15% in the first quarter, while Adobe’s Efficient Frontier, which serves clients in a variety of verticals, says it saw a 16% year-over-year increase in the U.S.. Meanwhile, the retail-heavy and U.S.-focused Rimm Kaufman Group (RKG) says search spend rose 30 percent as compared to the 2011 period.
All three companies recently released reports that give insight into how paid search did in the last quarter, and predict what spending might look like for the rest of the year to come.
Cost-per-click rates on Google continued to decline, according to Efficient Frontier. The company says Google CPCs fell by 5 percent year-over-year, and was down from the fourth quarter, as well. Still, by increasing clicks overall, the company has managed to hang onto its market share. It probably helps that Yahoo-Bing CPCs increased by 18% year-over-year, giving the Search Alliance less of an ROI advantage. According to Rimm Kaufman, Google CPCs fell 7% year-over-year in Q1, while CPCs on Yahoo-Bing rose 15% as compared to the year-ago period.
Though Efficient Frontier said cost-per-click pricing was down in the automotive and finance sectors, the company found that CPCs dropped most precipitously (by 17%) in the retail sector.
Covario also noted a drop in CPCs, saying they declined 3% from Q4 ’11. The company’s analysts believe search engine algorithm changes are behind the decline and predict pricing will stabilize in the second half of the year.
The biggest trend noted by Efficient Frontier is paid search on smartphones and tablets. The company says spend on mobile devices in the U.S. represented 7.7% of all search spend in the first quarter, mostly driven by growth in spending on tablets. Tablet spend has grown from nearly zero in May of 2011 to 4.25% of all search ad spend by March of 2012. Spend on tablets is now greater than that on smartphones. The company predicts that overall mobile device spend will account for 15 to 20 percent of search spend by the end of this year.
Part of what’s driving the move to tablets especially is that conversions on tablets exceeds that of desktop devices, yet CPCs on tablets continue to be lower.
Rimm Kaufman said it saw mobile traffic share at just under 14% at the end of the first quarter, which was nearly double 2011 levels. Tablets represented nearly 8% of paid search clicks and 57% of mobile clicks.
Google was the deliverer of much of that mobile traffic, and it continues to be the dominant player overall. The company commanded 78% market share in Q1, according to Covario. Spend on Google was up 1% from the typically-busy Q4 period, and up 23% over the year-ago period. The Yahoo-Bing Search Alliance showed 2% growth from the fourth quarter, but it’s still down 20% from the first quarter of 2011 and has 13% market share. Baidu, the leading player in China, grew 4% from last quarter and 142% year-over-year. The company rakes in 9% of global paid search spending.
Of the three companies, only Covario and Efficient Frontier made predictions about the rest of the year. Covario forecasts 18 to 22% annualized growth globally in 2012, while the Adobe unit only gives a U.S. number, saying growth will come in between 10 to 15 percent this year.