US Search Marketing Grew 17%, Facebook CPCs Grew 40% in Q1 2011

The U.S. search marketing sector grew as expected in the first quarter of 2011, according to Efficient Frontier. Among the important trends to highlight were the growing demand for Facebook’s ad products and the rapid expansion of display ad exchanges.

Efficient Frontier’s “Q1 2011: Global Digital Marketing Performance Report” showed that search marketing spend grew 17 percent year-over-year in the first quarter of 2011, which was in line with the organization’s predicted 15 percent growth. This was primarily driven by strong growth in the retail (spend was up 22 percent year-over-year) and finance (spend was up 18 percent year-over-year) sectors.

Google claimed 79.1 percent of the spend share in the paid search market, while Bing-Yahoo had 20.9 percent.

When it came to click share, Google notched 79.6 percent in the first quarter, while Bing-Yahoo got 20.4 percent, according to Efficient Frontier.

Yahoo-Bing has recovered its volume of impressions from to where it was just a year ago, marking a big 31 percent surge in the last two quarters. Google’s impressions rose 8 percent from a year ago, down a bit off of a +14 percent mark in the fourth quarter of 2010.

When it came to clicks, Yahoo-Bing is down 17 percent from where it was in the first quarter of 2010, though it’s up 4 percent from its marks in the third and fourth quarters. Google’s clicks are up 10 percent year-over-year.

However, Efficient Frontier expects Yahoo-Bing’s clicks to rise, thanks to its superior ROI. Yahoo-Bing’s ROI was 10 percent higher in the first quarter from where it was in the first quarter of 2010, while Google’s was 12 percent lower.

Meanwhile, demand for Facebook’s ad products continues to grow, as cost per clicks rose 40 percent quarter-over-quarter, “indicating that Facebook is becoming more competitive as advertisers realize its tremendous value.”

Efficient Frontier also notes that there was “massive” inventory growth in the display ad exchanges, as its clients saw more than 300 percent more inventory available on a year-over-year basis in the first quarter.

“In Q1 2011, CPMs contracted as inventory rose with CPMs 30% lower than Q1 2010,” the company noted in its report. “We expect pricing to continue to fluctuate in an inverse relationship to inventory. If inventory continues to expand, we expect to see further CPM declines. Even with price declines, the major exchanges stand to benefit (ex. Google’s AdEx) due to the explosion of new inventory.”

Efficient Frontier also notes that display advertisers are gaining both reach and efficiency as new technologies like real-time bidding become more common.

Source:

http://www.efrontier.com/sites/default/files/EF_1Q11GlobalReport.pdf