Search Spending to Increase 20% in Key Industries

Marketers continue to realize strong results from their paid search investments. In 2011, global spending in this marketing channel increased 21%. And for 2012, analysts are predicting an equally strong year as marketers, especially in key industries, compete for consumer attention online.

According to Covario, the 2011 search spending increase in North America was 10% on an annualized basis in the high-​tech and consumer electronics categories. Covario analysts also say they see Google at 76% and Yahoo-​Bing at 23%, largely dominating this market. However, they also believe there will be a shift in search spending as more paid search will take place at the local level in 2012.

Covario, which guides large clients in the high-​tech and consumer electronics categories in international search spending is recommending spending increases of 18–20% in North America in this channel. Analysts also say that clients in these industries should allocate between 75–80% of spending to Google and the remaining amount to Yahoo-​Bing. Secondary competitors like Vibrant Media, Business​.com or Ask will receive less than 3% of paid search spending.

Analysts also noted another trend in the paid search industry. For the first time in 2 years, the cost-​per-​click (CPC) began to drop in the last quarter of 2011. And while impressions increased slightly, clicks and click-​throughs jumped during the quarter. These changes are attributed to:

  • Changed consumer behavior which includes less reliance on broad search and more on social networks.
  • More efficiency in the search model is leading to relevant results and higher use of bidding platforms is driving down CPCs.
  • Improved search engine technology is “driving better recognition of user intent."

While search may be facing competition from alternate channels, marketers clearly intend to continue spending significant sums to reach consumers who are looking online for products and services.

[Sources: Gaylord, Charles. Fourth Quarter 2011 Paid Search. Covario​.com. 2011. Web. 16 Jan. 2012] 
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.