Firm Ups Estimates For Search Ad Spending Growth

Good news for the big search companies with earnings season just ahead. Search engine marketing firm Efficient Frontier has upped its estimates for search ad spending this year. The company now expects spending to increase between 15 and 20 percent, up from its earlier estimates of 10 to 15 percent growth, in part due to the economic recovery. By contrast, Efficient Frontier says search ad spending increased six percent in 2009.

Already, there are additional signs that the search ad market is on the way up. During the fourth quarter, Efficent Frontier says that search advertisers "shifted from cautious optimism to guarded enthusiasm and took a more aggressive position in search," according to a report due to be released tomorrow. Quarter-to-quarter and year-over-year growth were both up six percent. Year-over-year growth had been down five percent during the third quarter.

—Retail shines: Unsurprisingly, considering the holidays, much of the comeback was driven by spending by retailers, which was up 17 percent compared to a year ago. Travel spending, meanwhile, dropped 20 percent, while finance and auto were up just two percent each. Efficient Frontier expects retail spending to stay strong and says "growing consumer interest" in finance should boost finance spending ahead. Travel spending, however, is expected to remain weak.

—Google: Despite competition from Microsoft's Bing, Google (NSDQ: GOOG) solidified its lead in its share of advertisers' dollars (and of paid clicks). That was a shift from previous reports, which had indicated that Google was losing ground to Bing. Efficient Frontier says Google's share of overall search ad spending increased to 74.5 percent from 73.9 percent during the previous quarter. Bing's share, meanwhile, shrunk to 5.1 percent from 5.3 percent. The firm says that Bing's drop, however, is likely temporary, since Google has a particularly big advantage over its competitor in retail.

Published by: Joseph Tartakoff

Published 18th January, 2010

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