Start Spending at the Sound of the Bing

by Craig Macdonald | November 20, 2009

With the mid-point of Q4 past, we did a check on how paid search spending is growing since the end of Q3. Through November 15th, we have seen global paid search growing at 18% over Q3 run rates, with 25% growth in the US alone. This is faster than we predicted in our Q3 Global Search Spend Report, where we calculated growth rates of 10-15%, and larger than the spending changes we saw between Q3’08 and Q4’08. There is considerable increases in search activity as we also are tracking a growth rate of 46% for impressions globally. So more searches are being conducted – though CTRs are down 18% from Q3.

Some more preliminary key statistics:

Google growth from Q3 to Q4 is 9%, 14% in the US. Given the ongoing weakness in the US dollar, this means the overseas growth rate for Google quarter on quarter is almost 0%. CPCs on Google shrunk 7% from Q3. Market share is falling from 82% to 76%.

Bing growth quarter on quarter currently is tracking at 126%! There is a remarkable 290% increase in impressions served on Bing on a global basis from Q3 to Q4. Their ongoing promotion of the system seems to be paying some dividends. CPCs on Bing are up 38% from Q3. Bing market share globally rose from 5.6% in Q3 to 10.8% in Q4 so far.

Yahoo growth is up 32% from Q3 so far, and CPCs are seeing a slight uptick (8%) in the last month. Yahoo’s Dynamic Pricing program seems to be holding CPCs relatively constant on the network.

We will do a full analysis on search performance at the end of the quarter as usual, however, this mid-quarter check provides some key recommendations.

Actionable Insight #1: For brand advertisers in the high tech sector, expectations for Q4 spend increases over Q3 should be in the 15-20% range, instead of the 10-15% ranges predicted in our Q3 analysis. It may be necessary to ramp spending more aggressively during the December holiday season in order to maintain paid search market share.

Actionable Insight #2: Bing seems to be gaining traction, and it is now essentially at parity with Yahoo as far as spending levels and performance. Additional spending should be allocated to the network in order to take advantage of the fact that there are 200% increases in impressions served in Q4 over Q3.