The report, Covario's “Q3 2010 Global Search Spending Analysis,” which aggregates about $300 million in paid search spending from a variety of consumer electronics and technology-related companies (including Hewlett-Packard Co., IBM Corp. and Microsoft Corp.), found that spending behind paid search advertising was up 19.8% in the third quarter of this year compared to the second. Year over year, paid search spending rose 46.8%. Meanwhile, cost per clicks (CPCs) rose 14%.
Some of the growth came from the fact that Bing's search engine, rather than Yahoo's, now powers Yahoo search results, said Craig Macdonald, senior VP-products and CMO at Covario. “Advertisers are increasing budgets because companies that may have had the No. 1 search spot on Yahoo now might be below the fold,” he said. In order to stay above the fold, tech companies are buying their way onto that first search results page, he said.
Another change: Google Instant, which provides searchers with dynamic search suggestions as they type. Since this process creates a drop-down box, it also pushes paid search options out front. “Before [Instant], if 100 people were searching, on average, 82 would click on organic and 18 would click on paid, but now only 78% are clicking on organic listings,” Macdonald said. “Google paid search is dominating the first page, and early indications are that marketers are looking to capitalize on this change.” This also affects organic search since, Macdonald said, it's no longer sufficient to be in positions four or five in natural search results. “You need to be right at the top, which is why optimization matters even more,” he said.
Not everyone is convinced that paid search is becoming more essential. “Overall, we see marketers looking for less competitive options than paid search and starting to shift dollars around a bit in order to find more efficient costs per click,” said Shar VanBoskirk, VP-principal analyst at Forrester Research, adding that integration is key.
It's not enough to think about search marketing in the constraints of SEM or SEO, but as an overarching theme, since search now extends into social, display and mobile applications, she said. “For b-to-b marketers, this means the same smart planning they would employ for search marketing: Identifying who are your customers, what are they looking for and now where are they looking,” VanBoskirk said. “Then the strategy becomes, ‘How do I get found in any of the paths my users take when seeking information relevant to me?' rather than just ‘What paid search terms should I buy?' ”