April 13, 2010, 12:00 AM

Paid search spending is on the rise, two new reports find

U.S. paid search spending increased 11% in the first quarter of 2010 compared with the same period in 2009, according to SearchIgnite; Efficient Frontier reports a 20% jump. Both reports find that advertisers are spending more with Bing.

U.S. paid search spending increased 11% in the first quarter of 2010 compared with the same period in 2009, marking the strongest quarter for paid search since the fourth quarter of 2008, says a new report from search engine marketing services provider SearchIgnite. Growth was driven, in part, by the retail industry, which increased spending on paid search 26% in the first quarter of 2010 compared with the same period a year earlier, the report finds.

“We saw some indication that the impact of the recession on the digital economy was waning toward the end of last year,” says Roger Barnette, president of SearchIgnite. “The strong paid search growth in Q1 is another hopeful sign that the worst of the storm is over and that the search market is poised for a solid year ahead.”

Another new report suggests even greater growth. In the first quarter of 2010, spending on paid search grew 20% compared with the year-earlier quarter; retail paid search spending jumped 32% for the same period, according to Efficient Frontier, a search engine marketing firm.

Both firms measured clicks and spending based on their retailer clients’ search activities. Differences in the results stem from the number and types of companies in their client bases.

Both reports find that advertisers are spending more with newcomer search engine Bing: SearchIgnite says spending on Bing increased 22% in Q1 2010 over Q1 2009, and Efficient Frontier noted a 45% increase for the same period. “Retail continues to be a key driver of growth for the engine,” SearchIgnite says, but the firm does not break out Bing spending numbers by industry.

In contrast to Bing’s growth, its partner Yahoo saw further losses in market share across both clicks and in spend, the Efficient Frontier report finds. Yahoo’s share of clicks fell to 20.5% in Q1 2010 from 24.2% in Q1 2009, the report says. Yahoo’s share of spending fell to 18.7% in Q1 2010 from 21.3% in Q1 2009. Microsoft Corp., which owns Bing, and Yahoo have agreed for Bing to become the search engine on Yahoo sites in the next year.

Google expanded its dominant position in Q1 2010, closing in on 75% share of both spend and clicks. Bing increased its click and spend share to 5.5% and 6.5%, respectively.

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