Posted May 13, 2009 10:27 am by with 11 comments

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Hitwise reports paid search traffic is down 26% over the past 4 weeks (compared to 2008).

Surprisingly, the company makes a sweeping statement about the reason for this decline:

This is no doubt a result of cutbacks in marketing spend due to the recession.

Er, I have some doubt. For one thing, you’re own observations raise doubt:

Consistently, brand name terms (such as “travelocity”, “orbitz” and “walmart” saw a sharp decrease year over year in the share of paid clicks. For example, 35.75% of clicks on searches for “orbitz” were on paid listings in the four weeks to May 9, 2009. This compares to 46.56% in the same four week period in 2008. This represents a 23% decrease year over year.

Is that likely due to a reduction in spend, or Orbitz et al are figuring out that they really don’t need to spend so much on paid advertising–considering they’re #1 in the organic results? After all, you also state:

…search traffic coming from paid listings is decreasing at the expense of organic traffic.

Hitwise does a great job of providing us with this type of data, but this serves as a reminder that you can interpret this data any way you want. Only the advertisers–and perhaps the search engines–can tell us what’s really going on.

  • There are, as you say, many possible reasons for this decline. One is the possibility that web surfers dislike the paid for links they get to. People are becoming increasingly online “savvy”. A year ago, in a small study, I found that about one in three people were unaware that the right hand column on the Google results were, in fact, adverts. I suspect that has changed now. Plus, because so many of the adverts lead to inadequate pages – often unrelated to the actual search term used – people are giving up clicking on adverts as they don’t expect much in return. The advertisers only have themselves to blame.

  • I think Internet users are just getting immune to these paid advertisements on search results. People are realizing that some of them are not really the right thing they are ever looking for but they are there just because people pay to be there on the search results.

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  • Don

    If PPC traffic was truly down by 26%, we’d be seeing way more cost cutting from Google, Yahoo, and the smaller engines. Unless, there’s so much extra competition in the marketplace that while traffic dried up, CPCs went up by the same percent. I don’t think so! Think of it: Google’s Q1 Revenue, which comprises of 90% PPC ads, was $4.07B in Q1 (according to quarterly earnings). A 26% decline within 4 weeks would mean they couldn’t lay people off fast enough.

    I can say that while my ad spend is down from last year due to lower CPCs from weakened competition, my overall traffic from paid search is up…way up. My CPCs for similar positions are down 20-40%, while CTR has stayed relatively constant and even moved up (depends on the remaining competition of the specific terms). Some industries may be hurting–especially travel–and lots of companies may be cutting back, sweeping statements like this are rarely accurate and have no depth beyond making headlines.

  • I’m going to agree with Don on this. While my spend may have dipped in certain campaigns its mainly because CPCs have been adjusted down as competitors drop spend and drop out altogether. I am still seeing a high percentage of overall visits from paid traffic avenues, and I am also seeing high positions for lower CPCs.

    I think this data is someone startling more simply because of the travel agencies data represented. Travel is certainly getting hit right now. I worked PPC in travel for a few years and I can tell you there is a lot more collaboration between the travel agencies (via partnerships and affiliate agreements) than one would think, so I am not surprised to see “one spending less” equate to “many”. Agency budgets are very much connected in that space.

    Id like to see this split out for a few more high spend industries, and would be interested in hearing more feedback from reps in those industries as to why they believe the drastic decline has occurred…

  • Data can mean whatever you want it to mean (as shown above). Joanna makes an excellent point about the travel industry. Larger macroeconomic trends are causing that drop. Just goes to show that interpreting your data correctly is vital.

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  • OZ

    I think the reason for the reduction is quite clear, and that is mainly due to the economy. Look, cost cutting is happening in every single industry and company today.

    Establishing an efficient and profitable PPC strategy is not easy, and I suspect it is seen as a revenue driver as opposed to a cost cut. Right now, cost cutting is all the rage. PPC is something easy to cost cut, especially when it is not essential to business, which I suspect is the case.

    Just my 2 cents.

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  • After a lengthy discussion with the powers that be at Google, it would appear that they have become so much more strict in the past week or so on the quality of ads compared to the landing page and overall content of the site. From what I can gather from the conversation, the traditional ‘squeeze page’ will soon be dead.

    Its no secret that Google in particular does not rate one-page squeeze page websites as high quality, relevant web sites even though the vast majority of advertising is done by affiliate marketers and the like. Though from the information I received yesterday there has been a major increase recently in the number of complaints that have been received from the webmasters who are displaying the majority of these types of ads in particular.

    Stricter rules means fewer advertisers which in turn results in less ad variety which in turn means that users are (hopefully) not going to be clicking on the same ad they saw yesterday and will likely see again tomorrow. New strategies are going to be needed by traditional online marketers particularly in the affiliate an online home business advertisers. My own sites in the past 2 weeks have seen not just a dramatic drop in clicks but also a 30% decrease in impressions. Interestingly conversions remained steady. So I’m not yet convinced that they have got right.

    I personally run several single page web sites, which are in fact completely relevant to the keywords I target. All but one site at (this is a traditional squeeze page) have plenty of relevant content, keyword and phrases. We do offer a genuine opportunity for those that are interested. However Google has, in thier own wisdom, very recently knocked my quality scores down, which were previously getting 8/10 and are now set at 1/10. Several of my associates have also been hit by this and it seems there isn’t much that can be done about it.

    Simply put, the door is now open for a new generation of internet marketers to develop new more effective strategies of marketing coupled with more relevant content to ensure that users are happier with the results they get from the landing pages.

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