Report: Search Spending Off 8 Percent In Q4

While search engine marketing has been somewhat more durable during the recession (to date) than other media, that may not save SEM from negative growth. The Wall Street Journal is reporting on the latest Efficient Frontier search marketing report, set to be released tomorrow.

According to the Journal, the report will state that SEM declined 8 percent in the fourth quarter of 2008. The Journal also cites the report as follows:

Advertisers who spend less than $50,000 on search ads cut their spending by 23% year-over-year, while advertisers that spend more than $200,000 on search per month cut spending by 9% during that time. Purchases by advertisers who spend between $50,000 and $200,000 were relatively flat.

Finance and automotive advertising continued to deteriorate. Search-ad spending among financial advertisers fell 20% compared to the fourth quarter of 2007. Search spending from automotive advertisers declined 15% during that period.

However, retailers increased their SEM spend by 9 percent vs. Q4 2007 according to Efficient Frontier data in the Journal’s story. It adds that Efficient Frontier CEO James Beriker saw some clients’ spending begin to pick up toward the end of Q4.

Online display advertising, by comparison, has been hit much much harder than SEM and, in general, harder than I would have anticipated. PubMatic’s display AdPrice Index saw prices decline by nearly 50 percent from Q4 2007:

Source: PubMatic AdPrice Index

Search has fared much better than its online display cousin but it is still being buffeted by macro-economic conditions. We’ll get to see how accurate the spending predictions turn out to be when Google announces its Q4 earnings on January 22. Yahoo will report on January 27.