For the first time in two years, Yahoo has grown the percentage of spending from major technology advertisers in North America and Asia-Pacific (APAC) at the expense of Google, according to Covario’s Q2 2008 Global Search Spend Analysis series.
There are also signs of compression in paid-search spending growth, evidenced by a dip to 43% from a 52% growth rate in the previous quarterly analysis, according to Covario, which said this decline is partly because of budgetary pressures from economic conditions and better optimization that enables similar return results at lower spend levels.
This second installment in Covario’s analysis series shows the latest global paid-search spending allocation patterns for 128 brands at 12 major technology companies such as Adobe, Intel, Lenovo and Research in Motion (RIM) between Q1 2007 to Q2 2008. The combined paid search advertising spend of the analyzed brands represents more than $225 million.
“Our client roster inspired us to launch this analysis series due to our customers’ unique positions in the advertising ecosystem – they are US-based, but also global in the scope regarding their paid search advertising programs, so they tend not to be retailers or e-commerce vendors who focus on one geographic region,” said Craig Macdonald, VP of marketing and product management at Covario.
- Compared with the 10% North America budget allocation reported for Yahoo in Covario’s Q1 analysis, there was an increase to 14% in Q2 – coming directly from allocations that had previously gone to Google, which fell from 86% to 81% (Q1 to Q2).
- Although the share of spending allocation in APAC is only about 7% of budget allocation, Yahoo’s portion increased nearly 35% at the expense of Google. Yahoo climbed from approximately 15% in Q1 to 50% in Q2, while Google decreased from 72% in Q1 to 46% in Q2. The remainder of this share gain came from Baidu. Q2 allocation to Baidu was only 5% in Q2, down from approximately 14% in Q1.
- Europe, Middle East and Africa (EMEA) is a non-competitive market, with Google accounting for more than 90% of global advertisers’ paid-search spend. This is up more than 10% from a year ago and up nearly two percent from Q1.
- Spending in APAC was 7%, down slightly from nearly 12% in Q1. High-tech and consumer electronics companies, which dominate Covario’s analysis, tend not to allocate a very large advertising spend in the region because of concerns over intellectual property protection.
- North America accounts for 65% percent of spending, up by less than one percent from Q1 and up approximately 6.5% from 2Q07.
There has been a steady increase in allocations to EMEA-based search spending since 3Q07, Covario said: In the middle of last year, the allocation was less than 10% because of complications related to Yahoo’s Panama platform, in 2Q208 the allocation was up to 27.5%.
Advertisers are increasing their allocation to EMEA because of a more positive economic outlook in the region than in the United States, Covario said. Covario also does not necessarily expect a Q3 uptick in spending in APAC because of the Olympics, but there is a possibility of Olympics ads in EMEA and North America driving spending in those regions.