Global Paid Search Spending Grew 18 Percent in 2012

Global Paid Search Spending Grew 18 Percent in 2012

Covario, Inc., the leading independent search marketing agency, today issued its fourth quarter Global Paid Search Spend Analysis, reporting that spending on pay-per-click advertising (PPC) by its enterprise technology, consumer electronics, and retail clients rose 15 percent over the same quarter last year and 18 percent for the year as a whole over 2011.

Paid search advertising on mobile devices, such as smartphones and tablets, continued to accelerate throughout the year with mobile PPC spend increasing 30 percent in the fourth quarter year-over-year and 10 percent over the previous quarter. Plus, for the second consecutive quarter, cost-per-clicks (CPCs) on tablets exceeded those on personal computers.

Alex Funk, the author of the quarterly report and Covario's director of performance media, said global paid search spending growth for the year was generally in line with the firm's 2012 forecast.

Keyword pricing leveled out quarter-over-quarter with CPCs up 3 percent for the year due to what Funk described as "an emerging mobile headwind" of lower priced keywords for smartphones.

On a regional basis, Asia/Pacific experienced year-on-year growth of 13 percent. In the first signs of a slowdown, however, search spending in the region saw a double-digit decline in the fourth quarter versus the prior one. Despite the volatility, Funk sees APAC as a region where "major opportunities exist for paid search."

The Americas, led by the U.S. and Canada, saw strong 21 percent year-on-year growth in paid search spending in the fourth quarter. Paid search spend in Europe remained a bit more subdued with 10 percent fourth quarter growth versus the same period last year.

"The year-over-year balance in impressions, clicks, and costs demonstrates growth in the search universe in conjunction with a small increase in both CTRs (click-through rates) and CPCs," Funk said. "However, the quarter-on-quarter trends for impressions, clicks and costs paint a somewhat different picture that may not be indicative of the entire market."

Funk cited macroeconomic conditions in Europe and Asia/Pacific, along with Covario's concentrated data set, as factors playing a role in this consideration.

Globally among the major search engines Google continued to command more than 86 percent of the paid search market share. Advertiser increases in fourth quarter search spending with Google were up 13 percent from a year ago.

The Yahoo-Bing Network, with nearly 8 percent of the global search market share, grew at a solid clip with quarterly PPC spending up 23 percent year-over-year. This was tempered by a 6 percent decrease compared to the third quarter.

Baidu, which dominates China with market share estimates as high as 80 percent, saw media spend on its platform grow by 52 percent for the year, including a rebound of 2 percent growth versus the third quarter. According to Funk, Baidu accounted for about 5 percent of global PPC spending and impressions, as well as "an incredible" 23 percent of the world's clicks.

Looking ahead on a regional basis for 2013, Funk is recommending that advertisers budget for an increase of 18-20 percent in paid search spending in the Americas with an emphasis on Latin America as the region's largest growth opportunity.

Due to sustained weakness in the European zone, Funk is recommending a more modest 10 percent budget increase in that region. In the dynamic Asia/Pacific, he suggests that advertisers plan for incremental PPC spending in the 30-40 percent range.

With respect to the mobile space, the 2012 ad spend breakdown was 36 percent for smartphones and 64 percent for tablets.

"This gap continues to widen as we see higher purchase affinity for those users who search on a tablet device," Funk said. "Due to the growth in tablet ownership, this split has nearly flip-flopped from a year ago when smartphones made up 56 percent of the mobile portion of ad spend."

The full report is available as a free download from the Covario website at