At long last, it seems we’ve found a case where bullish recession-impact-deniers may not have been hallucinating. We’re six months into an economic slowdown now, and search spending has so far been mostly untouched, Citi’s Mark Mahaney reports from the SMX search conference in Seattle.* This is obviously good news for Google, which continues to swallow the lion’s share:
We attended the SMX Advanced Search Conference in Seattle, WA from June 3-4. The conference was for more advanced search advertisers and Web publishers, who were looking to improve their SEO/SEM capabilities. Attendees included SEO/SEM firms, publishers, and advertisers.
Search Ad Market Appears Robust, Despite Recession Concerns – Many marketers and SEMs we spoke with said business continues to be strong and they have not felt much impact from the weakening economy.
Relatively Strong Growth in Q2 Search Advertising – Based on our channel checks at SMX, it appears that search advertising across all verticals appears to be strong QTD. [This is really surprising. We’d at least expect some weakness in financial services, cars, etc.]
Microsoft’s Commitment To Improving Search – Kevin Johnson, Microsoft’s President of Platform and Services, noted that: 1) MSFT is no longer interested in acquiring all of Yahoo!; however, they are looking at strategic alternatives [party line]; 2) MSFT’s Cash Back Live Search program should increase usage and loyalty [but won’t move the needle against Google]; and 3) MSFT expects to sign more search distribution deals in the near future. [Buying share will probably temporarily bump up query share. Microsoft’s share will have to go up a lot before it begins to gain any economies of scale, however, let alone begin to slow Google’s steady march toward Windows-like dominance.]
Google Continues To Dominate…– Many SEM firms we spoke with indicated that Google continues to receive the lion share of advertiser budgets because of the volume of queries on their sites. [And that’s the key: Unless Microsoft/Yahoo can find some way to slow Google’s query share growth, nothing else matters.]
*It wasn’t that the logic that search was “immune” was unpersuasive. It’s just that when recessions start, 90% of folks think they’ll be unaffected, and then at the end only 10% are. If the downturn is prolonged, we still think search will get hit, but we also agree that it will be the last spending to get cut.