Search brought in $14.8 billion in the full year 2011, up almost 27 percent from $11.7 billion in 2010. Online advertising as a whole showed a 22% growth rate, according to the report.

In the fourth quarter of 2011, search revenues accounted for 46% of overall online ad spending, up from 43% in the same period of the previous year. The category brought in $4.2 billion in Q4 of 2011, up 29% year-over-year. In the fourth quarter of 2010, search represented $3.2 billion in revenues.

The continued strength in search jibes with trends in pricing models, as well. Performance priced ads accounted for 65% of full year 2011 revenues, up from 62% of the market in 2010. CPM or impression-based ads took 31% of the spend in 2011, down from 33% share in 2010. Ads priced on a hybrid basis were down to 4% share, from 5% the prior year.

P.S. Here’s our coverage of the full scope of the report on Marketing Land.

Covario, which serves mostly high-tech clients, says paid search in the Americas grew 15% in the first quarter, while Adobe’s Efficient Frontier, which serves clients in a variety of verticals, says it saw a 16% year-over-year increase in the U.S.. Meanwhile, the retail-heavy and U.S.-focused Rimm Kaufman Group (RKG) says search spend rose 30 percent as compared to the 2011 period.

All three companies recently released reports that give insight into how paid search did in the last quarter, and predict what spending might look like for the rest of the year to come.

Cost-per-click rates on Google continued to decline, according to Efficient Frontier. The company says Google CPCs fell by 5 percent year-over-year, and was down from the fourth quarter, as well. Still, by increasing clicks overall, the company has managed to hang onto its market share. It probably helps that Yahoo-Bing CPCs increased by 18% year-over-year, giving the Search Alliance less of an ROI advantage. According to Rimm Kaufman, Google CPCs fell 7% year-over-year in Q1, while CPCs on Yahoo-Bing rose 15% as compared to the year-ago period.

Image via Adobe's Efficient Frontier

Though Efficient Frontier said cost-per-click pricing was down in the automotive and finance sectors, the company found that CPCs dropped most precipitously (by 17%) in the retail sector.

Covario also noted a drop in CPCs, saying they declined 3% from Q4 ’11. The company’s analysts believe search engine algorithm changes are behind the decline and predict pricing will stabilize in the second half of the year.

The biggest trend noted by Efficient Frontier is paid search on smartphones and tablets. The company says spend on mobile devices in the U.S. represented 7.7% of all search spend in the first quarter, mostly driven by growth in spending on tablets. Tablet spend has grown from nearly zero in May of 2011 to 4.25% of all search ad spend by March of 2012. Spend on tablets is now greater than that on smartphones. The company predicts that overall mobile device spend will account for 15 to 20 percent of search spend by the end of this year.

Part of what’s driving the move to tablets especially is that conversions on tablets exceeds that of desktop devices, yet CPCs on tablets continue to be lower.

Image via Adobe's Efficient Frontier

Rimm Kaufman said it saw mobile traffic share at just under 14% at the end of the first quarter, which was nearly double 2011 levels. Tablets represented nearly 8% of paid search clicks and 57% of mobile clicks.

Image via Rimm Kaufman Group

Image by Rimm Kaufman Group

Google was the deliverer of much of that mobile traffic, and it continues to be the dominant player overall. The company commanded 78% market share in Q1, according to Covario. Spend on Google was up 1% from the typically-busy Q4 period, and up 23% over the year-ago period. The Yahoo-Bing Search Alliance showed 2% growth from the fourth quarter, but it’s still down 20% from the first quarter of 2011 and has 13% market share. Baidu, the leading player in China, grew 4% from last quarter and 142% year-over-year. The company rakes in 9% of global paid search spending.

Of the three companies, only Covario and Efficient Frontier made predictions about the rest of the year. Covario forecasts 18 to 22% annualized growth globally in 2012, while the Adobe unit only gives a U.S. number, saying growth will come in between 10 to 15 percent this year.

Google will also retain dominant share of the search ad spend at 77.9%, up from 74.4% share in 2011. By 2014, Google’s search ad share is expected to grow to almost 80%. Microsoft is expected to grow from 7% share in 2011 to 8.7% in 2014, while Yahoo is expected to drop from 6.7% share in 2011 to only 3% in 2014.

The chart below shows overall search ad spend growth in dollars and as a percent increase overtime:

The chart below shows the overall search ad spend growth by search site:

The chart below shows search ad market share by search site over time:

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Across the board, overall search spend increased, as advertisers on the whole enjoyed an increase in impressions and click-through rates, while achieving a lower average cost per click.

According to Efficient Frontier’s report:

Search spend increased significantly in Q4 of 2011, bolstered by aggressive spending by retailers. Overall, search spend grew 14% Year over Year (YoY) in the United States, while retail specifically grew by 18% YoY and 40% Quarter over Quarter (QoQ), indicating that search is still the primary driver of digital marketing spend.

Meanwhile, all of the reports cited reductions in overall cost per click ranging from 3% – 9%. From Covario’s report:

For paid search advertisers, Q4 ’11was the first quarter since mid-2010where the trend toward higherCPCswas broken. Impressions experienced only a moderate increase in volume, compared to the more dramatic increase we observed for clicks and CTRs.

IgnitionOne’s report said the trend has lead to to increased revenues:

Across all engines, Q4 CPCs are down -8.6% YoY and -2.3% compared to last quarter. This trend benefits both marketers and Google as clicks cost less while monetizing at the same rate and expanding impression base and higher clickthrough rates indicates top-line revenue growth for Google. The trend is driven by Google, as Yahoo!/Bing saw a YoY 6.4% increase in CPCs.

Benchmark CPCs & CTRs by Industry

One of the most useful statistics for small to medium businesses, all the way up to large enterprise search advertisers is bench-marking average CPC’s and CTR’s within their industry.

According to Marin’s report, this is how it shook out across seven major verticals:

Google Not The Best ROI, Despite More Investment

In a trend not unfamiliar to major retailers and large-scale search advertisers, the Bing/Yahoo alliance continued to produce higher return on investment. Efficient Frontier summed up the Q4 performance between the major search platforms:

Yahoo/Bing ROI is 9% more than Google maintaining it’s high traffic quality offering. Although it delivers better ROI than Google, advertisers still spent more on Google in Q4 indicating the ongoing importance of click and inventory volume.

If Bing/Yahoo can continue to gain search search share, however slow that may be, advertisers may be in even better shape by the time 2012 comes around.

As far as predictions go, these reports also showed significant increases in mobile and tablet advertising, as Greg Sterling reported earlier this week.

Related Articles

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• Report: IAC Is Google’s Biggest Ad Spender, According to Kantar
• Report: Google Controls 44 Percent Of Global Online Advertising
• Mobile Will Be 22 Percent Of Search Revs Next Year — Report
• Report: Paid Search Rebounded In Q3 2011

IAC is, of course, the parent company of Ask.com, Match.com and the Newsweek Daily Beast, among many other online brands.

Next on the list of top spenders according to the report, with $118.5 million, is Amazon.com, which promotes its flagship Amazon online store, as well as products like the Kindle Fire. Amazon’s largest ecommerce competitor, eBay, also made the list, dropping $70.6 million on Google.

Close behind Amazon was AT&T, with $115.6 million in spending. It’s competitors in the wireless space, Sprint Nextel ($53.4 million) and Verizon ($52.7 million), were also among the largest advertisers on Google during the period.

Expedia, and other companies with travel-related businesses also pony up the cash for ads on Google, the AdAge report indicated. Expedia spent $92 million in the first three quarters of the year; Priceline spent $67.6 million; and the Blackstone Group (parent of the Hilton and Orbitz brands) spent $47.5 million on Google. Enterprise Holdings ($43 million) and Avis Budget Group ($42 million) were also among the top spenders in the period. Enterprise Holdings owns the Enterprise, National, Alamo and WeCar rental car brands.

Google’s biggest competitor in the search space in the U.S., Microsoft, was also among the larger spenders, dropping $70 million.

Financial services companies were also well-represented, according to the report. Experian Group, Capital One, State Farm, Allstate, JP Morgan Chase, Progressive and Bank of America all made the list.

The lone automotive brand represented in the report was General Motors, which was said to have spent $49 million in advertising on Google during the first three quarters of 2011.

At a time when Google is defending against antitrust investigations on two continents this news is most unwelcome. The shares of all the other major US internet companies are tiny by comparison, though together with Google they control 61 percent of the world’s digital ad spending.

Overall the internet represents only 16 percent of global ad revenue according to ZenithOptimedia. TV, by comparison, is 40.2 percent of all ad expenditures. Hence Google’s interest in building YouTube into a bona fide TV/cable alternative.

ZenithOptimedia says that globally paid search will represent about 49 percent of all online advertising this year.

EMarketer has forecast that total US search ad revenues will reach just over $17 billion in 2012. If we do the simple math, and assume that mobile spending doesn’t add anything more to overall revenue growth, here’s what we get under EFF’s two mobile scenarios:

• 22 percent: $3.7 billion
• 16 percent: $2.7 billion

It’s worth noting that tablets already account for a significant portion of mobile search ad spending, as well as mobile clicks:

Efficient Frontier is seeing a sharp ramp in its search spend on Tablet devices. Over the past three months (Aug 2011 – Oct 2011), Tablets accounted for 43% of Efficient Frontier’s mobile search spend, and 50% of click share.

Google stands to be the beneficiary of mobile search revenue growth, at a disproportionate level vs rivals. Among EFF’s client base more than 95 percent of mobile search ad spending goes to Google.

This is commensurate with and a direct result of Google dominating mobile search. According to StatCounter Google controls about 95 percent of browser-based mobile search in North America.

Summarizing EFF’s lengthy discussion of mobile paid-search performance, mobile ads have higher CPCs and better CTRs but mobile ROI is less because of lower conversion levels:

• Across its advertiser clients, Efficient Frontier found that the average CPC on mobile phone search campaigns was actually slightly above (8% higher) than CPCs for desktop search campaigns.
• Mobile phone and tablet click-through rates for Efficient Frontier’s search advertisers are higher than for its desktop search campaigns, at 166% and 137%, respectively, of CTRs in desktop search.
• Lower conversions for mobile search campaigns result in ROI that is only 50% of the ROI for desktop campaigns according to Efficient Frontier’s data. Notably, 50% represents a significant improvement for this metric compared with mid-2010, when mobile ROI was only ~10% of desktop levels.

There’s a major caveat here however. ROI on mobile campaigns is being measured by traditional “conversion” metrics used on PC campaigns. EFF points out that a broader and more mobile-specific set of conversion metrics needs to be developed to evaluate the true efficacy of mobile search ads:

Until advertisers can more accurately attribute a wider range of “success” events such as offline store visits, offline and (delayed) online (desktop) sales, and phone calls to a mobile ad campaign, marketers using a traditional ROI-based approach to make campaign budget decisions will be less willing to increase mobile ad budgets. In the meantime, we expect “early adopter” mobile marketers will continue to test mobile as both a performance-based and branding ad medium.

EFF also compared query length on the PC, tablets and mobile devices. As was somewhat predictable, EFF found that PC queries are the longest, followed by tablets and mobile handsets in that order. It’s possible, however, that voice search may create longer and more specific mobile query strings in the future.

These stats, along with many more — such as which social media platforms see the most use by marketers (hint: Facebook) — were compiled into the infographic below by the people at Webmarketing123, which backed the survey:

Want the infographic for yourself? It was sent to us as part of press materials today about the survey, which we covered in this story: SEO Beats PPC & Social Media For Generating Leads, New Industry Report Says. It hasn’t yet been posted online for others to use, but it might appear later on the Webmarketing123 blog.

Feeling you need to get started in SEO, PPC and social media? A good place are Search Engine Land’s overview pages:

• What Is SEO / Search Engine Optimization?
• What Is PPC, CPC & Paid Search Marketing?
• What Is Social Media Marketing

The numbers come from the 2011 State of Digital Marketing Report, which was compiled by Webmarketing123, a California-based online marketing agency. The company surveyed more than 500 U.S. online marketers in August and September; about two-thirds of all respondents identified themselves as B2B marketers.

Whether B2B or B2C, both groups of marketers agree that SEO has the biggest impact on lead generation. 57 percent of B2B marketers credit SEO as their primary source of generating leads, while 41 percent of B2C marketers said the same thing.

Both types of marketers say that website traffic is the primary way they measure the success of online marketing efforts. Brand awareness was at the bottom of the list for measuring success by both B2B and B2C respondents.

The survey asked a number of budget-related questions, including one about which channels get the majority of the marketers’ budgets. On the B2B side, one-third indicated that SEO gets the majority of their budget. But on the B2C side, more than 42 percent say that PPC gets the majority of their budget — about double the number of B2C marketers who said SEO is their top budget allocation.

Overall, 60 percent of respondents said they plan to increase their budget for social media marketing in 2012; 53 percent plan to increase their budget for SEO and 40 percent will increase their PPC budget.

Those increases in social media spending are likely field by another couple statistics from the survey: 68 percent say they’ve generated leads from either Facebook, Twitter or LinkedIn, while 55 percent have closed deals from social media leads.

The 2011 State of Digital Marketing Report can be downloaded from Webmarketing123′s website. You’ll need to provide name and contact information. There’s also an associated infographic with many statistic, which we’ve posted separately here: Infographic: Digital Marketer Views On SEO, PPC & Social Media.

The Covario figures represent a rebound from a lull in Q2 of 2011. The agency attributes the comeback to strong back to school spending to market consumer technologies and strong growth in the Asia-Pacific region. Covario expects 2011 spending as a whole to end up 20% higher than 2011 — in line with the top-end of the company’s forecast.

Marin Software found its clients grew more efficient in the third quarter, possibly driving them to greater spend. On Google, the company saw a 19% increase in clicks on a 24% drop in impressions. This accompanied a 57% increase in click-through rates and a 18% drop in cost per-click. Marin attributed the trends to improved matching and more effective bidding.

On Yahoo and Bing — which typically have delivered greater performance, but lower volume — Marin found clients investing more. The company saw a 43% higher click volume at a 10% lower cost-per-click. Click-through rates declined by 10% year-over-year, but improved 9% from last quarter, which Marin interpreted as coming from improved ad matching or better traffic.

(Efficient Frontier released its own Q3 research earlier this week, also taking a look at the Google/Yahoo/Bing trends.)

Marin found that advertisers’ improvements in efficiency have come, at least in part, by the increasing use of more specific match types, moving from Broad to Phrase or Exact — increasing relevancy and click-through rates. By increasing use of Exact Match, Marin says they’ve grown their click share by 6% while increasing share of spend by only 2%.

This improvement in efficiency is expected to drive additional spending in 2012, according to Covario. The company’s advertisers expect to spend 18 to 22% more in 2012, with 18-20% growth in North America, 15-18% growth in Europe and the Middle East, and 40+% growth in the Asia Pacific region.