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Hey Yahoo and Microsoft – That Sound You Hear is Google Sucking up Your Ad Profits!

posted on July 17, 2008


While Yahoo is busy slurping, Google keeps sucking market share like an out of control turbine powered Hoover vacuum cleaner. Sucking the ad dollars right out of Yahoo’s pockets, that is. Great news for MSN though! In Q2 2008 versus Q2 2007, Microsoft Live Search only lost $0.01 on every search dollar spent while Yahoo lost $0.09! Guess who picked up that additional $.10? Why, it was GoogleVac! This according to Mountain View, California based Efficient Frontier.

Google Sucking Up Profits

Google accounted for 77.4 percent of total search engine spending in Q2 2008, an increase of 2 percentage points over the previous year. Yahoo! lost nearly 2 percentage points of search engine share in that period, accounting for 17.8 percent of total spend, and Microsoft Live Search’s share remained relatively stable at 4.8 percent of search engine spending.

On a brighter note for all three search companies, year over year (YOY) return on investment was improved. However, while CPC rates were improved for both Google and Microsoft Live Search, Yahoo took another significant hit.

Some additional highlights from the report include:

  • Cost per click (CPC) rates increased by 13.8 percent for Google in Q2 2008 versus a year ago, while average CPCs on Microsoft Live Search increased at a slower rate of 5.6 percent, and Yahoo! CPCs declined by 7.3 percent.
  • Return on Investment (ROI) improved on all three search engines, with Microsoft Live Search improving 25% YOY, while ROI on Yahoo! Search increased by 13%, and Google‘s ROI increased by 3%.
  • In Q2 2008, for the first time Google captured a majority share of search engine spend in Japan, with 56% of search spending in that market.

According to James Beriker, President & CEO of Efficient Frontier,

This overall growth in the search channel, along with increased ROI across all the search engines, indicates a positive outlook for search advertising as marketing budgets become increasingly scrutinized.

Efficient Frontier analyzed 23 billion impressions and more than 390 million clicks to determine how shifts in the search engine marketplaces impacted overall spending and campaign effectiveness.

You can download a copy of the report at the Efficient Frontier website.


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  • http://www.fiftystudio.com Fifty Studio

    And google is also sucking our ad spend dollars with increasing PPC rates. It kind of makes you wonder if Google destined for the “Ma Bell” treatment.

  • http://www.longhornkate.com Kate Morris

    Nice. This research seems to back up what so many other people are speculating. As much as I hate to admit it, MSFT is doing so much better than Yahoo in the paid area. I’ve pulled my spending in yahoo and applied it elsewhere. It breaks my heart.

    Kate Morris’s last blog post..15 Signs an SEO Girl Likes You

  • http://www.watchmovietrailers.tv Robert

    I dont like M$ at all. But i think only M$+Yahoo can stop the mighty G.

    Robert’s last blog post..Disaster Movie HD

  • http://www.mbwebdesign.co.uk MB Web Design

    Cost per click goes up year on year for Google – what a surprise, no wonder so many are investing in SEO for organic search engine visibility, the CPC model’s not viable for many small businesses to compete.

  • http://www.erikvossman.com Erik

    Interesting stats, I hadn’t heard any of these. You’d think they could follow the same model? Maybe the combined powers would work.

    Erik’s last blog post..Surrounded by Freelance Entrepreneurs

  • http://www.jordankasteler.com/utah-seo-pro-blog/ Utah SEO Pro

    Googlebot should be bigger than Yahoo/MSN not smaller. :)

    Utah SEO Pro’s last blog post..Advanced Keyword Research for SEO

  • http://mp3leben.com Tiffany

    I guess te one who get the benefit from endless bidding of Yahoo and Microsoft is Google. They don’t realize it I think…

  • http://www.360sell.com Sean Maguire

    @Utah SEO Pro – Yeah, he was supposed to be in the background – this smaller, but my perspective was off. I think it may have had something to do with the tone of the colors I used as well. I’ll try harder next time! ;)

  • http://www.futurefactory-software.com Warenwirtschaft

    Google is not sucking up yahoos money. It is sucking up the advertisers money with CPC costs rising that high. Thats the effect of the monopoly. I agree with “Fifty Studio”: Google is too big, they should be separated in different companies. Although i must admit i have absolutely no idea how this should work technically :-)

  • http://www.netage.co.za Goran Web Design

    Soon there will be only one…

    Google sure is devouring everything else in its way. I wonder how long this can continue for?

  • http://www.poems.md Ashley

    I think it can continue for quite a long time.

  • http://foolishmumbles.com Top Rated Digital

    As good an innovator as Google is, just imagine how good they would be, if they had some serious competition in the PPC biz to push them a little harder. I’d really like to see a Yahoo+MSN PPC alternative that was on par with Adsense.

    Top Rated Digital’s last blog post..What’s The Top Rated Canon Digital Camera?

  • http://www.searchforithere.com PD Festian

    Searchforithere.com does not charge on a pay per click basis. So your business celebrates profit, not the search engine.

  • http://www.netage.co.za Goran Web Design

    There is more competition competing on ppc now and more competitors will continue to advertise, and then of course there are more end users “optimising” their ads.

  • http://www.gourmetkitchencookware.com James

    Thanks for the stats, it’s getting hard to know what to expect from the major search engines. Seems that google might take over the web (though I hope they don’t)

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