Reports: Search Growth Surges

As the ad industry braces for a deep recession, someone needs to notify the search advertising business.

Spending on search engine advertising continues to exhibit nearly relentless growth, according to a slew of new reports conducted by various search-focused businesses. In fact, one of the biggest problems facing the industry is that brands can’t scale spending as much as they’d like.

For example, search spending surged by nearly 27% during the third quarter compared to the same period last year, according to SearchIgnite, a technology firm that helps manage $350 million in paid search on an annual basis. However, in what may be a sign of things to come, retailers increased their spending by just 1.5% in third quarter, though conversion rates for most brands increased, found the report.

Meanwhile, according to search agency Efficient Frontier in Sunnyvale, Calif., though spending growth has slowed to a degree, Google executives are not destined to be waiting on bread lines anytime soon. Based on an analysis of its clients’ third-quarter activity (which included 60 billion ad impressions and 428 million total clicks), Google received a staggering $1.14 per every dollar spent in the category compared with last year. (In other words, Google is able to reel in every new dollar spent on search, while also snatching 14 cents of spending from its competitors.)

And while that means second- and third-place players Yahoo! and Microsoft each lost spending share, all three companies’ return-on-investment averages improved during the quarter, said Efficient Frontier’s report. (The struggling financial services category proved to be the exception.)

Lastly, a new report issued by JupiterResearch found that 92% of large search marketers would increase their search spending by an average of 22%, if only search campaigns were made easier to buy and manage through better technology. And 85% of marketers surveyed by JupiterResearch complained that the complexity of paid search management is growing.

According to Jupiter, brands that spend the most ($500,000-plus) are having the toughest time managing and ultimately increasing their search spending output. Among that group, 59% said they simply don’t have enough people to increase search activity, while 69% complained that the existing tools used to execute search buys are insufficient.