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Covario Expect Asia/Pacific Search Ad Spend Will Grow in 2011

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A new study from Covario examining search advertising trends for high-tech industries shows intensely slowed growth for the second quarter of 2011, but that the year-to-date spending should still be on track for a 15 to 20 percent increase in 2011. Meanwhile, spending on Baidu almost doubled in comparison to last year.

The Overall High-Tech Ad Spend Picture

The study from Covario, an SEM and SEO company, is a recurring analysis that takes place each quarter. This is the 18th quarter of data that looks at Cavario's clientele, high-tech industries that advertise on a global scale and that now reach over $400 million (U.S.) in annual ad spending. Covario's data examines advertising data from 45 countries around the world.

Compared to the second quarter of last year, Q2 of 2011 saw just a 7 percent growth, compared to a 26 percent growth in the first quarter of 2011. The tapering growth is partially due to the low spending in Q1 of 2010, which suffered due to the recession and which thereby gave Q1 of 2011 an inflated figure. Additionally, the current economic situation in Europe has slowed down growth from 25 percent (the trend over the last three quarters) to 15 percent in Q2.

Growth percent isn't the only area of decline, however. Q2 saw an 11 percent decrease in overall ad spending, which is likely due to a need to keep first half advertising budgets in check. Despite the decline, however, Covario holds to its estimate of a 15 to 20 percent growth in YTD figures.

The Creeping CPC Inflation & Baidu's Explosive Rise

Among other key takeaways is a slow but steady rise in the cost per click of search advertisements. The average CPC for Q2 of 2011 was $0.83, compared to $0.79 in Q1 of 2011 and $0.76 in Q4 of 2010. Reasons for this continuous rise include increased adoption of Bing-Yahoo (and thus increased competition), additional investment in generic keywords, increased competition (and thus CPC) on Baidu, and Google Instant driving up CPC on Google.

Baidu's CPC increase is just part of the Chinese company's intense growth. Compared to Q2 of 2010, Baidu saw a 176 percent growth. This growth is a major contributing factor to a revised prediction by Covario. The company now expects total ad spend growth in the Asia/Pacific region to surpass 40 percent in 2011.

You can find the Covario Q2 study, as well as past quarterly data, on the Covario site.


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