Google Holds, Yahoo Gains Search Ad Share in Q4 2008, According to Efficient Frontier

Efficient Frontier has released a search engine advertising report for the fourth quarter of 2008. They found that Google held onto its 76% market share while Yahoo gained 3%.

Here are additional trends they found:

• Large vs. Small Advertisers: Small advertisers in the U.S. accounted for a greater decrease in search advertising spend than larger, more established brands. Advertisers spending less than $50,000 per month cut spending by 23 percent year-over-year, with many of the cuts coming between Q3 and Q4 of 2008. Companies that spent more than $200,000 per month only reduced spending by 9 percent over the same time period. These margins are typical during a recession when larger, more sophisticated brands aggressively utilize the search channel to drive revenue and sales while strengthening their position.
• Overall Impression Trends: Overall impressions for search engines are down 6 percent year-over-year. From Q4 2007 to Q4 2008, Google experienced a 3 percent decrease, while Yahoo lost 13 percent impression volume. Microsoft Live garnered 21 percent more impressions in Q4 than in Q3 2008 and gained 18 percent more impressions year-over-year.
• Click-Through Rate Trends: Overall click-through-rates (CTRs) in search were relatively flat year-over-year, gaining only 2 percent. While Microsoft Live Search had higher CTRs than all other search engines from Q1 to Q3 of 2008, it dipped below Google Search in Q4 2008. Google Search CTRs decreased by 2 percent year-over-year, while Yahoo CTRs improved 3 percent year-over-year. Google Content CTRs increased 150 percent year-over-year.
• Cost-Per-Click Highlights: Overall search cost-per-click (CPC) is down 5 percent year-over-year. In the last quarter of 2008, Google Search’s CPC declined by 8 percent, while Microsoft Live Search declined by 3 percent and Yahoo Search declined by 1 percent. Microsoft Live Search has consistently maintained a higher CPC than all other search engines, indicating that advertisers are willing to pay a premium for a high quality, albeit smaller audience.

Here are some niche-related findings:

• Automotive: 15 percent decline in spending over 2007, due primarily to lower impression volume, reflecting weakness in consumer demand.
• Finance: 25 percent decline in spend over 2007, with impressions up by 5 percent reflecting high customer demand for financial services, with but fewer qualified conversions.
• Retail: 9 percent increase in spend over 2007, reflecting the strength of the channel in price comparison and shopping efficiency, particularly for more established online brands that increased spend to reach revenue goals.
• Travel and Entertainment: 24 percent decrease in spend year-over year, primarily due to reduced traffic volume, which is down in by 18 percent in the sector year-over-year.

“Search engine marketing remains the most accountable sales and client acquisition channel on or offline,” said James Beriker, President and CEO of Efficient Frontier. “To continue to achieve stellar results, the current recession has made it even more critical for search marketers to know their metrics and manage campaigns based on actionable market, sales funnel and conversion data. The reason we work with more than 150 of the most sophisticated search marketers in 20 markets worldwide, and manage more spend than any other firm, is that we use math to automate the process of accurately modeling data and making the right overall strategy and keyword bidding decisions to deliver optimal performance, no matter the market dynamics.”

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