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ignitionone-search-ad-spend-growth-april2012.jpgPaid search spending grew 30.3% year-over-year in Q1, according to an April 2012 report from IgnitionOne. This represents the highest growth rate for search ad spend of any quarter since Q4 2010 (35%), and the highest growth rate in a first quarter since before 2009. Mobile and tablet search continued its impressive run, with spending on mobile search ads up 221.1% year-over-year, and impressions up 119.9%.

Overall search ad spend slowed 1.8% quarter-over-quarter after a healthy Q4 2011 holiday season. Mobile search ad spend also decreased when compared to its impressive Q4, although clicks were up 246.1% year-over-year, accelerating from the previous quarter.

CPCs Remain Relatively Unchanged

Cost per click (CPC) was relatively flat in Q1, up just 0.9% year-over-year, with Google CPCs continuing to drop, down 4.4%. Google’s clicks did rise a significant 32.5%, while click-through rates (CTR) were up 25.3%. IgnitionOne insight suggests that this could be due to the effects of increased adoption of new ad formats, which allow users the ability to select more relevant results than traditional keyword-based advertising.

Meanwhile, although there were year-over-year increases in clicks (29.1%), CTRs (20.4%) and impressions (7.2%), on a quarterly basis impressions fell 14.2% and clicks dropped 6.1%. Even so, CTR and CPC both increased quarter-over-quarter, up 9.4% and 4.6%, respectively.

Tablets Hold Two-Thirds of Mobile Search Budgets

Mobile search held 12.3% share of total search advertising spend in Q1, relatively unchanged from the previous quarter. This compares to recent Marin Software data, which indicates that after beginning the year at 3.4% of advertiser search budgets, mobile devices had reached 8.7% of all advertiser spend by December 2011, a 156% increase.

According to IgnitionOne, tablets accounted for 67.4% of total mobile budgets, meaning that they held 8.3% of total search advertising budgets for the quarter. Tablet CTRs outperformed PC rates (3.1% vs. 2.5%), while mobile devices with full browsers posted an even higher CTR of 4.4%.

Other Findings:

  • Yahoo! Bing had a strong showing in Q1, experiencing a 46.4% increase in search ad spend year-over-year, compared with 26.6% growth for Google. Yahoo! Bing also posted a quarter-over-quarter increase of 14.3%, compared to Google’s 5.4% decrease.
  • Within Yahoo! Bing, broad match terms saw a 43% increase in spend from Q1 2011. CPCs for the terms only increased 8%, while clicks increased 32% and revenue from the terms jumped close to 145% year-over-year. Exact match terms saw a 44% rise in spend, though this was primarily due to a 41% increase in CPCs.
  • The travel vertical also had a strong showing in Q1, with impressions and clicks up 34.6% and 34.1% year-over-year, respectively. Although transactions climbed 79% and revenue 32.3%, average order value decreased 26% from the previous year, which IgnitionOne suggests means more frequent travel but to less expensive destinations.
  • European search spend growth trailed that of the US, increasing 10.4% year-over-year in Q1. Clicks increased 12.2%, while impressions rose a marginal 0.2%.

About the Data: IgnitionOne’s data is based on a series of reports that have tracked more than 82 billion impressions and more than 1.9 billion clicks on Google and Yahoo!/Bing search networks, Google AdEx, and other display networks from January 1, 2006 through March 15, 2012.

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