Search Engine Advertiser Update – Q208
July 8, 2008
Perhaps as should be expected as we head into the summer months, Q2 was a quiet quarter for the search advertising industry.
While advertiser counts for all three search engines were flat to lower, it appears that Google and Yahoo have turned up the heat on Microsoft. While Yahoo managed to hang on to its advertiser base (+0.03%) and Google showed a small decline (-6.4%), we observed nearly a 20% drop in MSN’s active client count in Q1.
Of the three major search engines, only Yahoo has held onto its gains made over the past year. Trailing twelve month advertiser growth for Google, Yahoo, and MSN respectively were -8.5%, +9.8%, and -6.7% respectively.
While advertiser counts have historically been a reliable directional indicator of search revenue, we know that Google is attempting to change the rules of the game by placing increasing emphasis on ad quality. This is particularly evident when looking at the average number of ads displayed per keyword.
Over the past 6 months, the average number of ads per keyword shown on Google in the US has declined from 6.5 to 4.0, a nearly 40% drop. While it’s possible...