June 22, 2006, 12:00 AM

Search engine marketing ROI rises in Q1, study says

Sales garnered through search engine marketing surged 70% year-over-year in the first quarter, as campaign size and cost each grew 40%, producing the best search marketing ROI in 15 months, Performics reported.

 

Sales garnered through search engine marketing surged 70% year-over-year in the first quarter, as campaign size and cost each grew 40%, producing the best search marketing ROI in 15 months, Performics reported today in its Q1 Trend Report.

“The growing gap between spend and sales indicates that advertisers are making smarter decisions about how to maximize their search marketing spend,” said Stuart Frankel, president of Performics, a unit of online marketing products and services company DoubleClick.

The report also noted that consumers clicked on more specific keywords in Q1 than during the 2005 holiday shopping season, when they were more likely to click on more costly generic keywords. As a result, the share of keywords price above $1 fell from 7% at the end of Q4 to 5% at the end of Q1, Performics said.

"Shoppers in the fourth quarter were buying for others and although they knew they were going to purchase something, they weren`t necessarily sure what," said Frankel. "However, in the first quarter, when shoppers were buying for themselves, they had likely already narrowed down the options, and therefore were searching with more specific terms."

The report confirmed what Performics said was an expected fall-off in overall search costs between Q4 and Q1, as cost-per-keyword dropped 50% to about $30 in Q1 from a fourth-quarter high of $59.

The report also found:
-- The average number of active keywords-those receiving at least one click or conversion per month-rose 36% year-to-year in Q1, as total spend and clicks rose 37% and 24%, respectively, and sales rose 72%.
-- Year-to-year growth in the number of active keywords in Q1 outpaced the growth in number of clicks, indicating that searchers were clicking on a wider variety of keywords.
-- Cheaper keywords made a comeback in Q1, as the amount of clicks from keywords priced at more than 50 cents per click dropped to 20% in March from 30% in December.

 

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