"As the recession continues, advertisers and search engines alike have begun to successfully adjust their strategies by mapping to recent changes in consumer behaviour to increase profitability," says Efficient Frontier
in its UK Search Engine Performance Report: Q1 2009. "Additionally, return on investment (ROI) in search engine marketing (SEM) has shown a significant increase, a testament to the continued strength of the channel."
Advertisers have improved their ROI by 25% between Q4 2008 and Q1 2009 while spending 10.5% less, demonstrating "a continued shift towards an efficiency model as advertisers reduce spend in order to maintain ROI. Impression volume for Q1 2009 outstripped the usual seasonal increase as more consumers used search to buy products and get information. In addition, advertisers took advantage of the new consumer targeting offerings of the search engines."
According to David Karnstedt, president and CEO of Efficient Frontier, "The drop in CPCs indicates a deflation in the marketplace. Thus we find ourselves at an interesting crossroad. On the one hand, advertisers are cutting budgets resulting in cheaper clicks; on the other hand more users are searching online. This situation presents the ideal opportunity for large advertisers with deeper pockets to expand in this market, consolidate their market share, and get more valuable traffic at a discounted price point."
Overall, SEM spending decreased by 6% year on year and by 10.5% between Q4 2008 and Q1 2009, attributed in part, says Efficent Frontier, to the seasonal rise in retail spending in Q4, which tapers off again after the Christmas period.
You can download a copy of the full report free of charge from Efficient Frontier's website