Search-engine marketing on a downward trend

Efficient Frontier has released its UK Search Engine Performance Report for quarter two 2009, which revealed that search-engine marketing is continuing to show a downward trend.

The UK data in the Efficient Frontier Customer Index, a sample of Efficient Frontier's advertiser base, saw cost-per-clicks (CPCs) fall dramatically year-on-year - allowing advertisers to capture more volume at lower cost.

CPCs across the engines decreased by 20-31 per cent year-on-year; with the biggest fall being from Google with 31 per cent, followed by Bing and Yahoo with 30 per cent and 20 per cent respectively.

Efficient Frontier advertisers capitalised on this price reduction and achieved more click volume while maintaining the return-on-investment levels of prior quarters.

Return-on-investment (ROI) for advertisers remained stable with a two per cent improvement year-on-year.

Advertisers were still able to grow campaigns at a profitable return as dynamic search marketplaces adjusted to lower cost tolerances and less competition.

Jonathan Beeston, client services director for Europe at Efficient Frontier, said: 'We are seeing advertisers make their search-marketing budgets work harder than ever before.

'Paid search is very closely tied to the state of the economy due to its immediate nature and as the whole marketplace deflates, search-engine marketing is becoming cheaper.

'This is a great time for smart advertisers to take advantage of the opportunity and gain ground on their competitors.

In addition, search-engine marketing spend for the sample fell by 11 per cent when compared with the same period last year.

The biggest drop came in April, indicating advertisers revised search-engine marketing budgets for the quarter adjusting to more conservative forecasts for the new financial year.

The data does provide a glimmer of hope for recovery; in that advertisers - after the initial drop in April - increased month-on-month spending in May and June.

Search-engine efficiencies varied significantly over the course of the year.

While Google operated seven per cent more efficiently for advertisers year-on-year and Bing operated 16 per cent more efficiently, Yahoo Search was five per cent less efficient than quarter two 2008 at producing ROI for advertisers.

Yahoo's lower efficiency, given stable click volume and lower CPCs, indicates a likely decline in quality.

If left unchecked, it will drive spend allocation away from Yahoo Search to the other engines in coming quarters.

The launch of Microsoft's Bing in the US and the analysis of its success provide an interesting preview for its launch in the UK.

Bing only had a name change in the UK and no new features will be officially launched until 2010.

Bing's US launch in June resulted in initial gains in market share.

Bing picked up click share immediately upon launch and sustained share gains over the course of June with the strongest gains in the travel and financial services categories.

It will be interesting to observe how Bing trends develop in the UK.

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