Q1 Global Search Spend Up 16% Over Q1, 2009

Now that February is behind us, we have a chance to see how search spending in Q1 is doing for Covario’s high tech customers. As we have reported in the past, Covario tracks spending for most of the major bell-whether high tech companies – and does so on a global basis. Through March 7th, we have been able to compare paid search advertising performance from Q1 2009 through Q1 2010 to see how advertisers are spending.  In our Global Search Spend Analysis for 2009, published in January, we forecast that growth in paid search spend in 2010 would be 15% for the entire year.  So, what are advertisers actually doing?

Spending

It is hard to compare Q4 with Q1 in any particular year since Q4 tends to be the biggest spend quarter, and Q1 the smallest.  And Q1 so far has lived up to billing.  Spending is down 10% in APAC from Q4, 20% in EMEA, and 30% in Americas, but that is expected.  What is a more relevant comparison is how the paid search advertisers are spending versus Q1 of 2009 – remembering that we saw a huge decrease in spend last year (average of 30-35% globally) as the impact of the Great Recession hit our customers.  Spending in APAC is up 25% from last year in Q1, it is flat in EMEA (+.31%), and up 22.18% in Americas.  Overall, spending is up about 16% — right on the Covario forecast.

Looking again at Q1 2009 to Q1 2010 projections as the search engine platform level, here is what we are seeing so far.

• Google – Growth in the Americas is tracking at 20%, but is flat in EMEA and growing at 12% in APAC.  The slower growth in APAC, where overall growth is 25%, is likely due to the reduction in spend due to uncertainties around their commitment to the market over the “hacking incident.”
• Bing – we are seeing continued growth in Bing in the Americas – 75% from Q1 last year.  The Yahoo announcement, combined with a huge advertising campaign, is having an impact.  Not so in EMEA where spend is down 30% from same time last year.
• Yahoo – 5% growth in Americas, but impressive 40% growth in APAC – taking some share from Google in Japan and China.

So the trends we have been seeing since the summer – of Bing gaining market share, Google continuing to grow in a robust manner, and Yahoo continuing to gain market share in APAC – are continuing so far.

Key Statistics

A couple of other notable trends we are seeing.

• CPCs are down from Q4 – however this is common.  The reduction in overall demand for keyword drives down unit costs in the first quarter.  What was most interesting was a reduction in CPCs on Google – 20%, from Q4.  This is odd.  We are investigating with our media buyers in our agency and will provide a more in depth explanation in the our quarterly report (due out first week of April)
• CPCs are actually up  for Bing by 17% from Q4 – largely due to increased spending on the network, and increases in traffic.
• CTRs are also up globally – by 5% — with large increases in APAC and EMEA, but 10% reductions from Q4 in Americas.

(click on graphic to enlarge)

With this increases in spending expected for 2010, however, we continue to believe that unit CPCs for advertisers will appreciate. The reductions in Q1 are consistent with previous year.

ACTIONABLE INSIGHT – Covario’s forecast for global search spending increases for the year of 15% appears to be on track, as well as our forecast of increases in CPC rates. Advertisers should expect to increase budgets by this amount in 2010 or risk losing paid search market share.

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