The impact of the economy on search

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Last week, in its January 2008 QSearch paid click report, ComScore reported flat annual growth in paid clicks for Google in 2007 and an 8% decline from December to January in the number of paid clicks per Google search query. The findings led the search industry to begin speculating about a weak economy, following this logic: If Google is experiencing a recession, so will everyone else.

The ComScore report suggested con­sumers are clicking less on Google search ads. But Magid Abraham, president/CEO of ComScore, says in a blog entry that the numbers may not necessarily reflect a wider trend.

“While we do not claim that these con­cerns are unwarranted, we believe a care­ful analysis of our search data does not lend them direct support,” Abraham says. “More specifically, the evidence suggests that the softness in Google's paid click metrics is primarily a result of Google's own quality initiatives that result in a reduction in the number of paid listings and, therefore, the opportunity for paid clicks to occur. In addition, the reduction in the incidence of paid listings existed progressively throughout 2007 and was successfully offset by improved revenue per click.”

It has certainly been a question of what data are looked at. According to Bill Tanc­er, general manager of global research at Hitwise, search usage, which combines organic with paid search, grew 11% a day on average over the past year.

“We are not seeing a drop-off in search, but if there is, it seems that it would be happening in organic and paid search at the same time,” says Tancer.

He also notes that Hitwise has mea­sured an increase in traffic from Google searches to retail sites in the past year. “Searches to retail are probably a much better indicator of the economy than just measuring paid clicks,” he says. “It really raises the question of whether search data will really give us any indication of a potential recession.”

SearchIgnite, a search technology unit of digital agency Innovation Interactive, surveyed its own 500-marketer client list and came up with different data. Its clients saw an average of 45.7% increase year-over-year on paid clicks and an increase in ad spend on Google of 40.1% year-over-year.

“What we've seen over time is market­ers moving [an increasing] percentage of their overall marketing budget into more measurable media channels like online, [including] search marketing,” Roger Barnette, president of SearchIgnite, tells DMNews. “Marketers want to put their dollars — when they're uncertain about the economy — into channels that they can measure and channels that give the best return on investment.”

It may also help to look at the pur­chased keywords themselves. Hitwise is taking a preliminary look at searches for luxury products vs. budget products and the keywords that people for each.

“The nature of what people are search­ing for may be more indicative of some­thing like a recession,” Tancer says. “We've been able to predict unemployment based on keywords for job searches.”

However, whether or not a luxury key­word equals good times and a budget keyword equals hard times is not neces­sarily a hard and fast equation. Tancer suggests that there are a number of factors that could influence searches.

“People could be more aspirational dur­ing recessions and search for luxury items to build their spirits,” he says.

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