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Did Search Marketing Spend Fall in Quarter 4?

By | Search Engine Marketing, Search News | No Comments

This post I wrote the other day outlined many of the reasons why I believe that my plan to start up a search marketing company at the end of last year (beginning of economic crisis), was not as foolhardy as it may seem at first glance.

However, as soon as I wrote that article, little stories started appearing, which unnerved me. For example, an article in yesterdays papers saying that New South Wales (where I live and work) is the hardest hit state by this economic crisis. Then today, news that online search advertising spend in the US in Q4 2008 was down 8% on the previous year…the first quarter this has happened since recording started.

According to the study, Google maintained its 76% US market share, Yahoo fell down to 20% market share (from 24%).

The industries with the biggest reduction in spend were the financial companies and the automotives (Note: the ‘study’ is of one companies clients spend, they do have a large client base, but still, it isn’t totally representative).

Finance you can understand completely as not only have they been one of the hardest hit industries, but also they have such high online budgets in the first place, I think there was a lot of fat to cut.

As for automotive, I guess they are a relatively large chunk of an individual budget, which in these times needs to be carefully minded. It isn’t like the newspapers and coffee budget.

So it all sounds quite plausible, but before we get too convinced, we need to remember that this study is from a media company in America, and is based only on their clients. It isn’t based on revenues from Google or any other search engine, nor is it a fair cross section of companies, as these companies all have their media agency in common.

There are still estimates from other companies and analysts that say that Google will post increased profits due to all their slashing of projects and increased revenue streams. There are other ‘industry’ experts who still believe online marketing is going to be growing at above 14% in 2009 (an admitted fall on 2008, but not a shrink at least).

I am not sure whether these people are trying to control the market by ‘confidence’ (not a bad idea – I am still a big believer in the theory that the news has a lot to answer for regarding the financial crisis) or if they truly do believe their own hype.

I am in the delicate position of relying on and trusting numbers to make decisions and recommendations to my clients as part of my everyday work. But at the same time, I know how easily numbers can be manipulated as soon as they need to be released to the public (or other ‘sensitive’ audience).

It is a two-fold process. First you look at the numbers and see what they might mean. Then if you have to release this to a public audience, you have to think about what you will tell everyone else they mean. This is a well worn path for analysts working on public releases.

So why would the initial story makes a negative spin of it? Is it because there’s no such thing as bad publicity? Are they bracing shareholders for a surprisingly bad quarter by trying to say it is the ‘industry’ and not them? Or are they trying to match the sentiment of the day?

In any case,  it will be interesting to see  Googles actual Q4 results. Come Thursday, remember to read the numbers, not the headlines!

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