Paid Search Market Enjoys a Healthy Start to 2010

Spending on search engine marketing rose by 20 percent year-over-year during Q1 2010, according to data from search agency Efficient Frontier’s quarterly U.S. Search Engine Performance Report. The research also found query and click volumes have risen while cost-per-click levels remain relatively stable – resulting in greater return on investment for advertisers.

The agency suggests reinvigorated spending from retail advertisers, as well as healthier investment from companies in the automotive and financial sectors, helped drive growth, with retailers reportedly spending an average of 32 percent more during Q1 2010 than they did during the same three months in 2009. Meanwhile, auto and finance advertisers spent an average of 9 percent more, year-over-year.

Justin Merickel, Efficient Frontier’s VP of marketing, told ClickZ the company expects the strong start to the year to continue throughout 2010. “We’re expecting to see some pretty strong quarters coming up,” he said, predicting a 15 to 20 percent increase in spending during 2010, compared with 2009.

The report also found Microsoft’s Bing engine enjoyed substantial year-over-year growth, albeit from a relatively small base. The engine increased its share of clicks and spend by 5.5 percent and 6.5 percent, respectively, representing year-over-year growth of 45 percent for both metrics.

Bing also appears to be particularly strong in the travel sector, in which it apparently attracted a 9.1 percent share of search spend. Merickel suggests that strength could be attributed to a focus from Microsoft on the travel category, and also traffic from travel-related properties in its MSN Network.

Meanwhile, Yahoo’s search business continued to decline, attracting 12 percent less spend in Q1 2010 than it did during Q1 2009, and 15 percent fewer clicks. By contrast, Google continued to extend its dominance of the market – accounting for 74.8 percent of market spend and 74 percent of clicks.

Those findings are broadly in line with the Search Engine Marketing Professionals Organization’s “The State of Search Engine Marketing Report,” released last month, which also suggested marketers were finding improved results using Microsoft’s Bing engine.

The Efficient Frontier report was compiled using its clients’ data across a range of sectors.