US search marketing spending will grow 15% this year, according to a study released April 11 by digital marketing firm Efficient Frontier.
The study found that US search marketing spending grew 17% year-over-year in the first quarter of 2011, with the highest increases in the retail (22%) and finance (18%) sectors.
“In the case of retail, actually, cost-per-clicks (CPCs) year-over-year is very flat,” said Siddharth Shah, director of business analytics at Efficient Frontier. “What’s driving up demand is a higher number of impressions and clicks that advertisers are seeing. In other words, there are more consumers searching online and buying products online than ever before. In fact, most of the 22% increase in spending is coming from increases in the click volume.”
Conversely, the increase in spending by financial companies can be attributed to CPC increases, he said.
“Anecdotally, what we are seeing is a lot of acquisition marketing campaigns that financial companies are running, and they are willing to spend more than they did last year,” said Shah. The growth predictions are based on the recent trend of growth in CPC and click volume, he added.
The study also found that marketers’ ROI from search marketing spending on Bing and Yahoo increased 10% year-over-year in Q1. Return on investment from spending on Google decreased 12% year-over-year in the first quarter, but the revenue-per-click (RPC) for Google is 12% higher than for Bing-Yahoo.
Shah said Google’s higher CPC is the primary reason for the difference in ROI. However, he added that the results are not indicative of marketers at large because Efficient Frontier’s clients advertise more equally across the search engines than average marketers. The firm’s clients include Salesforce.com, Discover, Crate & Barrel, Travelodge and Capital One.