Bullish Google (GOOG) analysts have teamed up with Comscore to largely neutralize that horrific Google Comscore report, with analysts citing anecdotal reports from search engine marketers who say that Q1 spending on Google has remained strong. But now comes one of the largest SEM firms of all, Efficient Frontier, who says that spending on Gioogle by its US clients in January stunk.
What do we mean by “stunk”?
EF’s aid clicks on Google dropped 5% year-over-year (versus the flat performance reported by Comscore). Google’s cost-per-click improved, so spending was up year over year, but not by much.
Efficient Frontier’s US client base spent only 7% more on Google in January 2008 than they did in January 2007. Considering that Google’s US spending grew 40% year over year in Q4, this suggests a major slowdown.
Analysts and other SEM firms have reported a spending acceleration in February, so the February numbers will probably look better. But if EF’s performance is in any way indicative of broader spending trends, February and March will have to look a lot better for Google’s Q1 to be anything but a major disappointment.
Efficient Frontier’s US Client Index, which covers more than 20 million paid clicks each month, did indeed see a 5% drop in click volume on Google when comparing January 2008 to January 2007. But same advertiser spend was up on Google by 7% in the same period, and click through rates improved by 10%. CPCs were up by 13%. This data suggests, as Comscore posited, that Google is becoming more efficient at serving ads by delivering more relevant clicks to advertisers. Thus it is able to charge a higher premium for those ads, hence the increase in CPCs.
As we reported this morning and last week, another SEM firm, SearchIgnite has seen much stronger spending–up 45%.