The first quarter of 2011 started off strong in the U.S. for online marketing, with search marketing growing 17 percent year-over-year, according to a new report from Efficient Frontier.

Facebook advertising is getting more competitive, with Cost Per Clicks (CPCs) increasing by 40% Quarter on Quarter (QoQ). Display advertising also showed positive signs with a 300% increase in exchange ad inventory and a 30% Cost Per Thousand (CPM) decline, indicating gains in reach and efficiency within the ad exchanges.

“The strong showing for digital marketing in the first quarter of 2011 was in line with our prediction of a 15% to 20% increase in spend in 2011,” said David Karnstedt, President and CEO, Efficient Frontier. 

“We’re also seeing great demand for Facebook’s ad products as the social networking giant’s ad offerings continue to evolve. This is all solid evidence of an economic recovery, and that marketers are seeing tremendous results when they intelligently allocate their marketing spend and optimize across channels.”

Google continues to have the majority of overall market share in SEM spend and clicks since the Bing-Yahoo! integration. However, Bing’s ROI is currently higher than Google’s ROI. Bing’s ROI has increased 10% YoY while Google’s ROI has decreased by 12% YoY. While the revenue per click (RPC) on Bing is 12% lower than Google, the CPCs on Bing are also lower than the CPCs on Google, which is driving Bing’s higher ROI.

Efficient Frontier saw significant momentum in Facebook advertising throughout the last several quarters. Advertisers want to take advantage of the full capabilities in the Facebook Marketplace to engage with their fans and promote their brands. Because of this, spend on Facebook is growing. The analysis shows CPCs have grown by 44% QoQ, indicating that Facebook is becoming more competitive as advertisers realize its significant value.