Google Gets $1.10 For Every New Dollar Spent

    July 17, 2008
    WebProNews Staff

For every new dollar spent on search marketing, Google grabs $1.10. Probably the last time you heard a number like that, it was from a basketball coach at half-time encouraging you to give the mythical one hundred and ten percent. How does that happen in real numbers? Looks like Google takes a little from Yahoo and Microsoft.

UPDATE: Efficient Frontier’s Director of Research and Communications clarifies that the numbers mean that Google grabbed every cent of new search money spent last quarter among Efficient Frontier’s sample, and those same advertisers reallocated money usually reserved for Yahoo and Microsoft.

The confusing figure comes from Efficient Frontier’s US Search Engine Performance Report: Q2 2008, which compares 2007 and 2008 second quarter data gleaned from a fixed set of large-scale search engine advertisers. While Google grabbed all of the new money and then some last quarter, Yahoo lost nine cents and Microsoft Live Search lost one cent.

This is likely good news for Google in advance of today’s earnings report, which will be released this afternoon. Analysts expect GOOG to bring $4.72 per share. The stock could use a boost today, too. Though Google crushed estimates in the first quarter, shares are down just under three percent currently.

The 110 percent conundrum aside, Google snagged 77.4 percent of old and new money, leaving Yahoo and Microsoft scavenging for 17.8 percent and 4.8 percent respectively, with Yahoo losing two percent overall and Microsoft remaining steady. In Japan, Google was not so dominant despite grabbing a majority (56%) of search spend there.

Google leads in cost per click inflation, too. CPC advertising on Google is 13.8 percent more expensive than last year, and 5.6 percent more expensive on Microsoft. Advertisers got a bargain in Q2 on Yahoo though, where CPC prices declined by 7.3 percent.

It’s not all bad news for Yahoo and Microsoft. The only two legitimate competitors in the field delivered better ROI last quarter, with Yahoo increasing its ROI by 25 percent and Microsoft upping ROI by 13 percent. Google ROI increased by just three percent last quarter.

The automotive sector led the new money in search advertising, increasing search spend by 24 percent, likely fueled by increased interest in better gas mileage. Retailers cautiously upped their spend by just one percent, while financial services advertisers and travel advertisers both trimmed their search budgets in light of recent economic hardships.

Request for clarification of the surprising $1.10 per dollar number was not returned by Efficient Frontier by press time.