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CPC Declines on Big 3 Search Engines, ROI Strong

Advertisers Demand Greater ROI While Reducing Budgets

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Average cost-per-click in the US declined last year on the big three search engines according to research from Efficient Frontier. Google’s fell 14%, Yahoo’s fell 16%, and Microsoft’s fell 28% over a year’s time (via CNET). Essentially the study indicates that less money was spent per search ad.

Advertisers may have cut back spending, but ROI for search engine marketing is proving strong. In Q1 2009, ROI has improved by 10% from the previous quarter. ROI jumped 30% from January to February. In fact, advertising spending even improved by 6% from Febrary to March.

"Advertisers will continue to demand greater ROI from their search campaigns, as a buffer against economic uncertainty," says Dr. Siddarth Shah, senior business analyst at Efficient Frontier. "We are at an interesting crossroads. On one hand, advertisers are slicing budgets. On the other, more users are searching online, and clicks are cheap. This provides the perfect opportunity for advertisers with deep pockets to embrace the downturn, to consolidate market share and continue growing their businesses."

Meanwhile, display and video advertising spending have been on the rise. comScore showed that banner ads increased by 8% in a year’s time, and videos grew by 74%.

Spending on Banners

Efficient Frontier’s research is based on an analysis of 84 billion impressions and 785 million clicks across a portion of their clients, which according to them, includes some of the world’s largest brands. You can get more details and statistics from their report here.

CPC Declines on Big 3 Search Engines, ROI Strong
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