Google Gets $1.10 for Each New Dollar Spent on Search, 77% of All Search Spend

July 17, 2008

This article is included in these additional categories:

Asia-Pacific | Paid Search

Google accounted for 77.4% of US search engine ad spend in the second quarter, an increase of 2 percentage points over 2Q07, according to Efficient Frontier’s “US Search Engine Performance Report: Q2 2008,” based on data from a fixed set of large-scale search advertisers.


Yahoo lost nearly 2 percentage points of search engine share in that period, accounting for 17.8% of total spend, and Microsoft Live Search’s share remained relatively stable at 4.8% of search engine spending.

Google also gained more than its “fair share” of new search-advertising dollars: For every new dollar spent on search ads in Q2 2008 (compared with Q2 2007), Google received $1.10, whereas Yahoo lost $0.09 and Microsoft Live Search lost $0.01, Efficient Frontier found.

Other highlights from the report:

  • Cost-per-click (CPC) rates increased 13.8% for Google in Q2 compared with the year-earlier period, whereas average CPCs on Microsoft Live Search increased at the slower rate of 5.6% and Yahoo CPCs declined 7.3%.


  • Return on investment (ROI) improved on all three search engines, with ROI leader Microsoft Live Search improving 25% from 2Q07; ROI on Yahoo Search increased 13%, and Google’s ROI increased 3%.
  • Automotive advertisers increased search advertising spending 24% in Q2 versus 2Q07, but retailers increased search spending a cautious 1%; financial services advertisers, hit hard by the mortgage crisis, decreased search engine spending 7%, and travel advertisers decreased spend 17% as consumers pulled back on leisure spending.
  • The global outlook for Google’s growth is positive, with the search giant capturing 75% or more of search engine spending in Q2 in the global markets in which Efficient Frontier operates, with the exception of Japan and China. In Q2, for the first time Google captured a majority share of search engine spend in Japan, with 56% of search spending in that market.

“This overall growth in the search channel, along with increased ROI across all the search engines, indicates a positive outlook for search advertising as marketing budgets become increasingly scrutinized,” said James Beriker, president and CEO of Efficient Frontier.

About the study: Efficient Frontier analyzed 23 billion impressions and more than 390 million clicks to determine how shifts in the search engine marketplaces impacted overall spending and campaign effectiveness. The “Search Engine Performance Report: Q2 2008” was completed based on data from a fixed sample of Efficient Frontier’s US clients from Q2 2007 through Q2 2008, and includes data from large search engine advertisers across multiple verticals as well as findings on search engine spend, click-through rates, CPCs and ROI.

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