Digital Marketing Closes Strong in 2010

Digital Marketing Closes Strong in the Final Quarter of 2010;Advertisers and Consumers Signal Economic Turn Around

 

Data Based on Efficient Frontier’s Q4 2010 U.S. Digital Marketing Performance Report

 

Sunnyvale, Calif.– January 18, 2011 – The last quarter of 2010 ended a strong year for the digital marketing industry with substantial growth overall and in the key sectors of finance, auto, retail and travel.  Search engine marketing (SEM) posted solid year on year (YoY) growth of 23% and 18% quarter on quarter (QoQ). This is according to Efficient Frontier, a leading performance marketing company managing more than $1 billion in marketing spend annually on behalf of advertisers and agencies worldwide. This data and specific industry trends were released today in the company’s Q4 2010 U.S. Digital Marketing Performance Report.

 

“2010 ended with a bang as fourth quarter digital marketing spend rose across all the major categories including retail, finance, auto and travel,” said David Karnstedt, President and CEO, Efficient Frontier.  “Advertisers seem to be signaling that the economy is turning around by increasing their marketing spend across search, display and Facebook to respond to consumer demand.  We see 2011 as a great opportunity for marketers to manage their online campaigns more holistically across the various channels.”

 

Report Highlights:

In 2010, growth was solid in all sectors and is mostly attributed to Cost Per Click (CPC) increases.  Also, the Bing-Yahoo! integration went smoothly as demonstrated by the consistent advertiser spend share for the newly combined platform. The demand for display advertising was reinvigorated throughout 2010 with Google AdX responsible for the majority of exchange-based display media spend. Facebook’s marketplace advertising continues to be strong and early results show that, in addition to being a significant stand-alone marketing channel, Facebook advertising has a positive impact on other digital marketing channels such as search and display.

 

Broad-Based Search Growth Across All Sectors

Retail led search growth during the first half of 2010. After growing 20% YoY in Q3, the retail category posted another positive YoY growth rate of 18% in the final quarter of the year. Importantly, all sectors outside of retail also showed strength.  Travel extended the strength seen throughout 2010 with an impressive 42% YoY rise, while the automotive sector also had a strong showing, posting a 33% rise.

 

·         Retail: Spend was up 18% YoY on CPC gains as well as increased consumer demand;

·         Travel: Spend was up 42% YoY on CPC and click through rate gains;

·         Finance: Spend was up 30% YoY on CPC gains;

·         Auto: Spend was up 33% YoY on CPC gains as well as increased consumer demand.

 

Continued Search Gains Indicate Renewed Advertiser and Consumer Confidence

2010 was a strong year for search.  Both advertiser and consumer sentiment showed that the economy is recovering.  Also, Google’s AdX attracted more advertiser dollars as 2010 progressed.  In Q4 2010, Google AdX represented about 70% of advertisers’ display media spend outlay.

 

Outlook for 2011

CPC Increases Continue to Drive SEM Growth

Efficient Frontier believes that search will continue its growth in 2011 due to continued CPC increases.  Our prediction is that search spend will increase by 15-20% YoY in the U.S. in 2011.

 

Bing-Yahoo! Market Share Increase
We believe that Bing-Yahoo! market spend share will start to climb back as smaller and medium sized advertisers with increased budgets take advantage of the volume potential and stronger ROIs on the new platform.

Display and Social Media Continue to Grow
2010 was a strong year for display advertising, especially for Google AdX.  Efficient Frontier predicts that it will continue to gain market share.  Additionally, we believe that social media advertising – especially Facebook – will continue to gain momentum. Advertisers that have solved the cross channel marketing puzzle by equipping themselves with the appropriate tools to measure and monetize the cross channel impact will have a leg up in 2011.

 

Research Methodology

This analysis was completed based on data from Efficient Frontier search engine marketing customers and the resulting Efficient Frontier’s Customer Index.  The Efficient Frontier Customer Index represents a subset of the company’s clients with spend data for six consecutive quarters or more, whose resulting SEM metrics are then normalized to average industry category contributions established by multiple third-party data providers.  The Efficient Frontier Customer Index consists of a fixed sample of large scale U.S. search engine advertisers across multiple sectors, including finance, travel, retail and automotive.  The Efficient Frontier Customer Index sheds light on trends in search engine spending and performance on YoY and QoQ basis. 

 

The complete U.S. Digital Performance Marketing Report: Q4 2010 is available for download from the Efficient Frontier website at: http://www.efrontier.com/research/search-engine-report/Q4-2010

 

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About Efficient Frontier

 

Efficient Frontier is a leader in online performance marketing managing search marketing, display and social media campaigns for advertisers and agencies around the world.  Efficient Frontier currently manages more than $1 billion in annual marketing spend on behalf of their clients globally.  Founded in 2002, Efficient Frontier pioneered the application of modern portfolio theory for search engine marketing and today combines its core predictive modeling algorithms and bidding technology with comprehensive strategic and tactical value-added services.  The largest and most sophisticated advertisers and agencies partner with Efficient Frontier to achieve and sustain optimal campaign performance and growth in highly complex and competitive marketplaces.  The company is headquartered in Sunnyvale, California, with offices in New York, the United Kingdom, France, Germany, and India, and technology licensing partnerships in Japan, Hong Kong and Australia.  Efficient Frontier is a privately held company with funding from Redpoint Ventures and Cambrian Ventures.  For more information, please visit http://www.efrontier.comand subscribe to the Efficient Frontier blog at blog.efrontier.com.

 

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