AdGooroo Mid-Quarter Search Engine Update - Q408

Mid-Quarter Search Engine Update - Q408
December 4, 2008

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First page advertising activity on all three search engines was up sharply during the first two months of Q4. While substantial growth is to be expected during the holiday season, the increase in active advertiser counts is surprising given the current environment of gloom and doom. This is particularly evident when you compare Q408 growth in first-page advertisers to Q407:

While advertiser counts are higher on all three search engines, Google’s 55% increase is well beyond what can be expected from seasonality alone. The remaining increase can be attributed to increasing ad coverage, up from 2.4 in September to 4.4 in November (a change that Google management promised during their Q2 earnings call).

This is the most significant increase we’ve seen in two years. As we stated in previous reports, ad coverage is a leading indicator of advertising activity, and it appears that Google has managed to increase ad coverage to about where it was in January, 2008.

Microsoft also seems to be taking advantage of the favorable environment. We estimate that Microsoft has increased their advertiser share from 11.5% in Q3 to about 15.8% in Q4 (37% increase), dramatically narrowing the gap with Yahoo! for second place as the engine of choice for search marketers. (For comparison, Yahoo! Now stands at about 22.1% and Google at 80.3%)

It is widely accepted that the economic slowdown would find its way into search advertising, but these figures seem to be giving the lie to this belief. Far from it – it appears that Q408 may end up as the strongest quarter on record for both Google and Microsoft.

Continued in full report...

Charts available in full report:

1. Monthly Growth in Advertiser Count
2. Share of Advertisers by Search Engine
3. Avg # Ads/Keyword (US & International)
4. Avg # Ads/Keyword (US only)
5. Top 25 Advertisers by Search Engine

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