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Is Search Weathering the Recession Storm?

By Peter Young

Depending on who you decide to subscribe to it appears to have been a bit of a mixed bag for search spend during the final quarter of 2008. Recent reports by both Covario and Efficient Frontier have both released slightly differing reports on how search has fared, however there is one consistency that seems to be common to be both—search in comparison to nearly every other channel appears to be holding its own, in what can only be described as extremely trying times.

According to a report by online analytics firm Covario, search spend actually ‘surged’ during the final quarter of 2008, 43% YOY increase over the same period in 2007—a 7.2% gain over 3rd quarter 2008 spending. Such figures are all the more impressive given the circumstances experienced during the latter part of last year. It however should be noted this report was based on 12 of Covario’s U.S.-based high tech and consumer electronics customers—and thus is fairly limited in terms of scope.

The report certainly offered a slightly more positive picture than that of AdGooroo and Efficient Frontier reports which highlighted a slightly less optimistic overview of performance during the last quarter—however certainly still pleasant reading for anybody within the search community. The report also highlighted the continuing dominance of Google within the American marketplace, and the continuing decline of Yahoo as the best of the ‘also-rans.’

In terms of first page ads, Google led the way with 58% more first page ads than the previous quarter, compared with 42% for MSN and a mere 8.8% for Yahoo. Certainly not good reading for new Yahoo CEO Carol Bartz.

Other significant findings from the reports included:

  • AdGooroo suggested a combined Microsoft/Yahoo! entity would increase large advertiser counts on the Live Search network by 157 percent, making a strong case for Microsoft acquiring Yahoo!
  • AdGooroo highlighted that Microsoft continued to close the gap in advertiser share with Yahoo: In Q3, Yahoo! led by 17.6 percent, but this lead has narrowed to 3.0 percent at the end of Q4.
  • Covario highlighted a potential new competitor to the ‘Googleopoly’. Baidu, the dominant search advertising platform in China, is beginning to make significant inroads within North America. Their share of paid search spending among North American high-tech firms jumped to 11.0% in the fourth quarter from 5.6% in the third quarter of 2008.

One of the biggest sector winners during this quarter was the retail sector, with Efficient Frontier highlighting a 9% increase in spend in Q4 2008 vs Q4 2007, a figure SearchIgnite puts at 12%.

For the meantime it would appear search marketing is weathering the recession storm, however there is no doubt there is still a hell of a ride still go before this voyage is finished. However given the advantages and accountability and cost-effectiveness that search engine marketing offers, one would certainly not suggest that this is likely to be a short-term trend. As advertisers strive for greater accountability in value, search is in a perfect position to meet those requirements and cement its position as a ‘must-have’ rather than a ‘should-have.’

Peter Young is a Search Engine Marketing Consultant for MVi and owner of the Holistic Search Marketing Blog

  • Shirley

    Well, this is surprising to hear. I’ve heard that money spent for other types of marketing were down.

    Although, what we could be seeing is a shift from one type of advertising to another. So overall advertising dollars could be down, but one sector just favored a bit more in this crisis.

    It will be interesting to see if this trend remains throughout this year.

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  • Eric Markovic


    Have you even read any of the reports you cited?

    “The report certainly offered a slightly more positive picture than that of AdGooroo and Efficient Frontier reports which highlighted a slightly less optimistic overview of performance during the last quarter”

    AdGooroo released one of the most equivocally optimistic reports this quarter. Efficient Frontier on the other hand, posted a study stating search would be down Y/Y.

    This was a very irresponsible and misleading post.

  • Pilgrim Writer

    Hi Eric

    Thanks for the response. The above post is only a summary of the reports that came out, and I think it is worth noting many of the reports need to be taken in context in that they are for the final quarter of 2008, and in the case of Covario cover a very limited dataset as well (12 in total).

    My personal thoughts are that the first half of 2009, will give us a clearer picture of where we currently sit and more detailed overview of how search is doing – although I would still suggest that it will come out far stronger than the vast majority of marcomms channels

  • Nick Stamoulis

    I think it might have also been from holiday numbers. The first 6 months of 2009 will let us know how things are going to be.

  • Kenney and Kim

    That’s awesome. I would expect though that search would hold it’s own. When money is tight you have to go with what you know works, and with search you get to put yourself in front of prospects that are looking for your product right then.

    I still think that the Yahoo and MSN deal is a good one. I like both of them. And some of the services that MSN offers like would be even better.

  • Symbian

    I think search marketing would be less expensive in 2009

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  • Terry Van Horne

    IMO, this quote from above about the Covario report says a lot about the report!
    “was based on 12 of Covario’s U.S.-based high tech and consumer electronics customers—and thus is fairly limited in terms of scope.”

    They are sectors that have been hit hard by the consumer belt tightening and my intuition tells me that execs looked at the inventory and panicked knowing the Christams season was going to influence heavily who makes it to 2010. I found in the campaigns I managed that bids increased as we got closer to the 25th and vendors saw all that unpaid inventory was going to be costly to carry.

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