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

• Covario: Consumer Electronics Marketers Take Q4 Paid Search Boom Overseas
• 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.

Here are some of the bullets from the report:

• Search spend increased 20 percent year over year in the US and 16 percent in the UK
• Google regained market share “for the first time” since the Yahoo-Bing search alliance (see today’s comScore numbers)
• Facebook CPC increased by 54 percent vs. Q2 with further increases anticipated. In addition the Facebook ad spend grew 25 percent quarter over quarter. However marketers also saw improved fan engagement and ROI
• Exchange display ad spending grew 7 percent quarter over quarter

Google controls roughly 82 percent of both the clicks and the spend in paid search according to Efficient Frontier. The company also said that this is “the first quarter that Google has gained more spend share from Yahoo/Bing across sectors since the Yahoo/Bing alliance  . . . [as a partial] result of improved CTRs on Google.” In addition, it “can also be attributed to the shift in marketers looking for more volume as they head into the Q4 retail peak.”

Yahoo and Bing deliver higher quality traffic and better ROI according to Efficient Frontier: “Yahoo/Bing has pulled ahead indicating a stronger delivery of higher quality traffic.” The challenge for Bing-Yahoo is traffic and scale.

The report teases some mobile data but doesn’t offer any drill down:

• Tablets (read: iPad) captured 77 percent of all retail mobile ad spending in September 2011
• Mobile search spend is roughly 7 percent of total search ad spend with tablets representing 60 percent of all mobile impressions and clicks.
• Mobile is projected to reach up to 10 percent of paid search spend by end of Q4

Efficient Frontier added that marketers will get greater visibility into conversions where users are signed into Google:

The ability to attribute conversions across devices (mobile, tablet, desktop) is now possible with the development of the Google+ network that keeps users logged in to the Google ecosystem. Advertisers should prepare for this trend by investing time into looking at tablet traffic and conversions, while optimizing websites for mobile.

Source: IAB

A new mobile ad spending forecast out today from eMarketer argues that US mobile advertising revenues will cross the $1 billion threshold and reach $1.2 billion this year. Of that SMS-based marketing contributes 44 percent and search represents 28.5 percent or $349.4 million.

According to eMarketer paid search will assume the lead in 2013. By 2015 mobile paid search will be dominant, with more than 40 percent of mobile ad revenues.

Source: eMarketer

My view is that eMarketer may be underestimating mobile search revenues in this forecast. A year ago Google announced that mobile ad revenues were “on [an] annualized run rate of over $1 billion.” That number is almost certainly higher today and I would imagine that more than 50 percent of that revenue is being generated in North America.

Last October I a quick analysis of how that $1 billion might be allocated:

• AdMob: $200 million in topline (optimistic)
• Google mobile AdSense: $217.5 million
• Google mobile search: $507 million
• Android app revenues: $75 million (optimistic)

Again those numbers are going to be larger today. Google may be seeing closer to $700 million or more in mobile paid search on a global basis, half or more of which is coming from the US. That would mean Google alone is generating $350 million mobile paid search revenue.