February 1, 2011, 12:00 AM

As holiday search budgets rise, sales jump up 69%

As e-retailers spent more on paid search marketing during the 2010 holiday shopping season, they received more sales in return. Google, meanwhile, grabbed more market share in paid search spending during the fourth quarter.

Allison Enright

Editor

E-retailers spent more on paid search marketing this holiday season and got more sales in return. Search advertising budgets were up 52% during November and December from a year ago and online sales attributable to paid search were up 69%, according to Kenshoo Inc., a vendor of software that helps manage paid search and online marketing programs.

The increased paid search advertising spending level coincided with higher year-over-year click-through rates and conversion rates, according to Kenshoo's 2010 Online Retail Holiday Shopping Report. It says the holiday click-through rate was up 54% and conversions were up 21%. The vendor takes the measures from an index it maintains that gauges client performance.

The positive results mean online marketers saw a good return on their paid search investments. Kenshoo says ROI was up 25% from a year ago and that marketers got a return of $10.60 for every $1 spent on paid search.

Similarly, SearchIgnite, an online marketing company, says that its retail clients' search spending increased 36.6% during the fourth quarter. Click-through rates were up 17.9% and conversions were up 22.5% during the three-month tracking period.

"It was an extremely strong quarter across the board," says Roger Barnette, CEO of SearchIgnite. "In the fourth quarter, spend was up, clicks and click-through rates were all up. It shows marketers and consumers are interacting more and engaging more."

Unsurprisingly, Google, the world's largest search engine, was the premier venue for paid search spending during Q4. Google increased its lead from Q3 to Q4, taking share from the now-combined Yahoo and Bing search engines. Google captured 82.6% of the paid search ad market versus 17.4% for Yahoo and Bing during Q4, according to SearchIgnite. During Q3 the comparable split was 80.2% and 19.8%. Google says fourth quarter paid click volume was up 18% from a year ago.

allison@verticalwebmedia.com

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