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Massive Increases in Global Paid Search Spending

Posted on 10.16.2011

Independent search marketing agency (and software solutions provider) Covario released its third quarter Global Search Advertising Spend Analysis last week. The whitepaper included information showing that paid search spending by technology and consumer electronics companies improved greatly from its less-than-stellar second quarter.

Global pay-per-click (PPC) advertising in the third quarter of 2011 was up a whole 26 percent from the preceding quarter and 24 percent from quarter three of 2010. This growth is seen as a result of strong numbers in back-to-school shopping and an increase in investments in the Asia-Pacific region.

According to the Senior Vice President and Chief Marketing Officer at Covario, Craig Macdonald, "Technology and consumer electronics advertisers are upping their budgets for Asia-Pacific and are now looking at search spend growth for the full year in APAC to be in the 40-plus range."

Cost-per-click (CPC) advertising, which is the average transaction cost for purchasing search engine advertisements, has consistently seen 2 percent quarter-on-quarter price inflation because of an increase in competition for search engine auctions; this is, in large part, a result of "robust growth" in search marketing spending in Asia-Pacific.

Macdonald believes that the technology sector will increase global paid search spending by approximately 20 percent for 2011.

Of course, APAC wasn't the only region that increased its paid search spending. In North America, it grew by 21 percent; in the same quarter last year it only increased by 7 percent. In Europe, there was a 23 percent increase from the second quarter and a 24 percent increase from Q3 2010.

"We do, however, see growth slowing in Europe," cautioned Macdonald.

Covario seemed intent on pointing out that "major growth opportunities for global advertisers are in Asia-Pacific, where quarter on quarter growth was at 45 percent and year on year paid search spend was up more than 100 percent." The biggest boom areas for PPC investment in the area are Japan, China, India, Australia and New Zealand.

Other important findings by Covario include:

- 75 percent of paid search technology clients see paid media spending on Facebook being a key part of annual budgeting in the upcoming year.

- Overall growth in paid search spending for 2012 should be in the 18-22 percent range. In North America, it will be 18-20; in Europe it will fall between 15-20; and it should land between 30-25 in Asia-Pacific.

- Google does, and will continue to, control the majority of the spending, as it has a 75 percent share of the global paid search market. Yahoo-Bing take about 15 percent, and Baidu is set to grow to 8 percent.

- Predictions state that mobile search marketing will only command about 3-5 percent of overall paid search marketing. The real money in mobile search strategies right now is in SEO and Web development.

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