Researchers at Citibank talked to four large agencies doing a lot of SEM — Covario, Efficient Frontier, Marin Software and Position 2 — and what emerged was a picture of second quarter spending that looks weaker than once expected. And the full year, by most accounts, will be down from what most previously thought, if only slightly.
Covario said many of its clients spent much of their first-half budgets in Q1, leaving less left over for the second quarter. That will result in only a 7% year-over-year growth rate for Q2 among Covario’s client base, versus the 26% seen in Q1. Search spend has declined 20% from last quarter in the U.S., according to Covario’s CMO, Craig MacDonald.
More of that money (10% more) is going to Google this year, and the Search Alliance (Yahoo/Bing) is getting 8% less, according to Covario.
Meanwhile, at Efficient Frontier, Q2 is up 8 to 11% year-over-year, though the company had originally expected 12-15% growth. Most of that growth has come from the Finance sector (up 25-30% Y/Y) while Retail (up 10% Y/Y) and Autos (flat) have not performed as well.
Info from Marin Software and Position 2 was more sparse, but both have seen a slowdown in the second quarter versus the first.
For the full year of 2011, Citi now expects search spend to grow just 10-20% versus the 15-20% the search engine marketing agencies expected previously.
Interestingly, search marketers are allocating at least 10%, if not fully 20%, of the money they’re spending on search to Facebook. Different agencies reported different numbers, but it’s clear Facebook is a formidable and growing presence. The trend toward social prompted Citi to declare a more cautious stance on Google’s future, given that it doesn’t own the social graph. However, the researchers noted that they hadn’t seen any actual signs of Google’s influence fading.