Study: U.S. search spend up 14%

U.S. marketers spent 14% more money on search advertising in the fourth quarter of 2011 than they did during the prior year’s final quarter, according to a study by digital marketing firm Efficient Frontier. The company also found that mobile accounted for 7% to 8% of search spend in the period; the segment’s share was only 2% in the fourth quarter of 2010.

Siddharth Shah, senior director of business analytics at Efficient Frontier, said the company projects mobile’s share of search spend will continue to rise throughout 2012 and finish the year at 16% to 22%. Shah said mobile’s rise has been “accelerated by the advent of tablets,” noting a 50/50 spend split between tablets and smartphones. He added that 77% of retailers’ mobile traffic comes from tablets.

Facebook ate up 2.7% of all biddable online ad spend during the fourth quarter and led to advertisers increasing their numbers of Facebook fans at an average rate of 9% per month for the period, Efficient Frontier found. The company expects Facebook to reach 5% of all biddable online ad spend by the end of this year. 

Shah said that between Q4 2010 and Q4 2011, the average fan base for brands managed by social marketing company Context Optional — which Efficient Frontier acquired in May — basically doubled. “And the interesting thing is that that trend is continuing,” he said. “We are expecting that fan base to again double by Q4 2012.” 

Asked when he expects that growth to plateau, Shah said he speculates an easing to take place “sometime in the next year or two” as brands begin to experience difficulties in acquiring fans because of “brand fatigue on the part of fans” and increasing fan acquisition costs.

“If you track the [costs-per-click] that brands are willing to pay [on Facebook], they’ve been increasing by 30 to 40% per quarter for the last three quarters,” he said.

While Facebook’s cost-per-click (CPC) has risen, Shah said, search CPC dropped 5%. Shah attributed the falling cost to a growth in clicks from mobile, where CPCs are lower. Efficient Frontier broke out search return on investment (ROI) and revenue-per-click (RPC) figures by Google and the MicrosoftYahoo Search Alliance and found that Bing-Yahoo deliver a 9% higher ROI and 14% higher RPC than Google. 

“Bing’s engine actually removes a lot of the poor-quality affiliate traffic from Yahoo, with the nice result that the ROI and RPC are much better than they ever were before, but they really haven’t been able to improve their market share because their traffic pool is smaller,” Shah said. “So I believe that in 2012 they will try to pursue more ad inventory and try to expand their inventory.”

Impacting the search ROI and RPC numbers is Google’s higher CPC compared to that of Microsoft-Yahoo’s, although Google’s CPC dropped 2% year-over-year and Bing-Yahoo’s grew by 16%. Shah said the numbers are not indicative of marketers at large because Efficient Frontier’s clients advertise more equally across the search engines than average marketers.

Adobe said in November that it had agreed to acquire Efficient Frontier, which will become part of Adobe’s Digital Marketing Business after the deal closes. Adobe said it expects the acquisition to close during the first quarter of its 2012 fiscal year.

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