Internet Paid Search Down Globally to Start 2010 | Covario Reports
Firm is Optimistic about 2010 as a Whole, Predicting up to 18 Percent Growth
SAN DIEGO, April 6, 2010 — Today’s release of the quarterly Global Search Spending Analysis from Covario, Inc., the leader in software and services for paid and organic search management, reports that paid search among its U.S.-based high technology and consumer electronics clients was down worldwide by 7.6 percent in the first quarter of 2010 compared to the last quarter of 2009.
This was driven by anticipated Internet spending declines in the Americas (primarily the U.S.), which decreased 11.9 percent during the period from a robust fourth quarter holiday season. The story was different in the Asia/Pacific and European regions, which saw increases of 19.6 and 5 percent, respectively.
More encouraging was that global paid search advertising was up 5.5 percent compared to the first quarter of 2009, suggesting a greater degree of economic confidence among these tech companies in the year ahead.
“Overall, we’re expecting a 14 to 18 percent increase for the year,” said Craig Macdonald, senior vice president and chief marketing officer for Covario, which has conducted the study for the past nine quarters and has data going back 13 quarters.
The study touched upon Google, which dominates paid search with 75.3 percent of the global market, and its decision to shift its access points to Hong Kong for the fast-growing China market, where it has a significant but less imposing 55 percent share for global high tech firms. While barely reflected in the first quarter numbers, Covario expects most of the Internet spending aimed at China to shift to Baidu — the country’s No. 1 search engine with 60 percent share of paid search advertising spend — increasing eventually to more than 85 percent.
“In addition to Baidu, this presents an opportunity for Bing to re-enter the Chinese market as an effective competitor,” Macdonald said. “Microsoft already has a big footprint and brand recognition in the region, although Bing itself does not. They should increase investment in product development and marketing given Google’s exit.”
The study also took note of Bing’s steady U.S. performance with 13.1 percent share for the quarter, coming off “the big gain” it made between the third and fourth quarters of 2009. Google and Yahoo (at 14 percent) also held steady.
According to Macdonald, “The steady market share news in the U.S. is great for Yahoo, where concerns of potential share loss have been rampant since the Bing deal last summer. Thankfully for Yahoo, high tech advertisers are sticking with the platform.”
Google continued to be the most cost effective search platform during the quarter. Covario’s Acquisition Cost Index found that the search giant’s average cost per acquisition (CPC) was 5 percent below the market average, although this is down from being 9 percent below the market average in the fourth quarter of 2009.
The Covario Global Paid Search Spend Analysis is based on paid search spending from U.S.-based high tech and consumer electronics customers. It spans the first quarter of 2007 through the first quarter of 2010. The combined paid search advertising spending of the analyzed brands represents more than $250 million annually. All data is measured using Covario’s Paid Search Insight technology, which is being used by 20 Fortune 500 companies.