Tech Firm Spending on Paid Search Exceeds Expectations for 2010

SAN DIEGO, CA -- (Marketwire) -- 01/06/11 -- Covario, Inc., one of the nation's largest independent providers of search marketing software solutions and agency services, today issued its latest Global Search Spending Analysis, reporting that spending for paid search advertising among its high-tech and consumer electronics clients increased nearly 27 percent in 2010 versus the previous year. This surpassed the company's original expectations by 9 to 13 percent.Spending in the fourth quarter increased nearly 8 percent over the previous three-month period (with December being slower than November and October). This quarterly growth was lower than the 25-plus percent growth rates in the second and third quarters of 2010, but was up nearly 30 percent compared to the recession-plagued fourth quarter of 2009.

Although its overall market share was down slightly, Google continued to dominate the paid search scene in 2010 with global market share of 78 percent and spending growth of 18 percent over 2009. Among the other major search engines, paid search spend on Yahoo was up 34 percent, while global spending on Bing increased 84 percent over the prior year. Baidu of China stood out throughout the year with growth of 211 percent over 2009.

According Craig Macdonald, author of the quarterly report and Covario's chief marketing officer, there were several growth drivers for global paid search spending in 2010. One was the launch of Google Instant, which continues to benefit Google as a larger proportion of all clicks are moving from natural to paid search. Another driver was the dramatic growth of Baidu in China, following Google's repositioning of its system in that country during the first quarter of 2010. (Baidu now has more than 80 percent of all paid search spending by Covario clients in China.) A third was the integration of Bing and Yahoo in the U.S., which has led to increased paid search spending on the combined platform.

With respect to the decline in Google's overall market share, Macdonald cited several key factors, including how Baidu has taken control of the market in China, which up until last year had been the best global growth opportunity for Google. He also pointed to Google's 96 percent market share in Europe, the Middle East and Africa (EMEA), which is so high that there is no significant global growth opportunity in the region.

"These two factors combined make the Americas the only area where significant search spending growth can still take place for Google," Macdonald said. "In the Americas, growth is coming from social media advertising, which is being dominated by Facebook."

Looking ahead in 2011, Covario is recommending that global high-tech marketers increase their paid search spending by 15 to 20 percent overall to maintain market share -- 10 to 14 percent in the Americas, 25 to 30 percent in EMEA, and 30 to 35 percent in the Asia Pacific region.

"We are also predicting that 2011 will be the year of Facebook," Macdonald said. "Advertisers should plan on investing 10 to 20 percent of their global paid search budget in this massive social media platform as part of their digital marketing mix this year."

The Covario Global Search Spending Analysis encompasses all of the major search engines and is based on paid search spending by the company's high-tech and consumer electronics clients. This is the third year of the analysis, which spans the first quarter of 2007 through the fourth quarter of 2010. Covario clients represent about $350 million in annual paid search programs conducted on various search engine platforms in more than 45 countries. All of the data was compiled using the Covario Paid Search Insight™ software solution.

About Covario ™ Covario, Inc. is among the nation's largest independent SEM (search engine marketing) and SEO (search engine optimization) solutions providers, offering both software and agency services for paid and organic search management. Covario provides large global organizations with robust solutions for paid search advertising, organic search (SEO), social media and display advertising. Covario enables complex and distributed organizations to control their brand integrity; ensure budget transparency; and deliver quantifiable results across business units, distribution channels and languages. Headquartered in San Diego, the company's growing customer base includes some of the world's best known brands in technology, retail, ecommerce, financial services, consumer electronics, media, entertainment, publishing and consumer packaged goods. More information about Covario is available by calling 858.397.1500 or online at http://www.covario.com.

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