Digital Media Buzz > SEM Economy Poised for Recovery in ‘09

SEM Economy Poised for Recovery in ‘09

By Efficient Frontier

During Q2 2009, as the economy slowed its freefall, Search Engine Marketing stabilized in the U.S. from a series of accelerating declines. Efficient Frontier’s data shows that the rate of decline in total spend year-over-year (YOY) lessened over the past two quarters. Furthermore, spend remained relatively stable both on a quarter-over-quarter (QOQ) and month-over-month basis.

A deeper look at our data shows that an aggregate market stabilization masks very different trends by advertiser size. Large advertiser trends matched the total market showing a stabilization in spend. Medium sized advertisers increased spend, capitalizing on the opportunity to grow share efficiently, given the less competitive marketplace and greater access to marketing resources compared to smaller advertisers. And smaller advertisers continued to slow spend.

Advertisers remain focused on efficiency, working to meet or grow campaigns at lower investment levels. Advertisers are using more aggressive return on investment (ROI) and cost-per-acquisition (CPA) targets to ensure higher SEM efficiencies. As a result, cost per clicks are down resulting in a search market that is operating at a 30-percent higher efficiency rate YOY. However, search engine efficiencies varied significantly; Google’s ROI rose dramatically while Yahoo! saw a moderate decline in efficiency. With search engine click opportunities consistent both YOY and QOQ, the variances in efficiency will likely drive spend allocation changes in favor of a more efficient Google in the coming quarters. Overall market share in spend and clicks was relatively consistent with past quarters.

The big news was Microsoft’s Bing launch in June resulting in promising initial gains in market share. Live Search previously lost market share for two consecutive quarters, Q4 2008 and Q1 2009. Bing picked up click share immediately upon launch and sustained share gains over the course of June. Microsoft’s new “decision engine” posted the strongest gains in the travel and financial services categories.