With the adoption of new ad formats and further penetration of tablets, the growth of paid search is on the up. According to IgnitionOne‘s new online report on Global Online Advertising, the first quarter of 2012 showed a 30.3% year on year growth in search advertising. 

The comprehensive report outlines some of the biggest areas of growth in this area including targeted paid search spend, Yahoo/ Bing market share and an increase of mobile search activity, especially from tablets.

A significant growth in paid search spending

The first quarter of this year has seen the highest year on year growth rate in ad spend since before 2009. Google CPCs are on the decline and are down 4.4% while an increase in clicks (29.1%) as well as click through rates (20.4%) has been seen. As users can select results that are more relevant to them compared to a past reliance on blanket keyword advertising, the adoption of new ad formats seem to have an advantage over organic search. If this continues, marketers may see better return on investment on paid search.

Yahoo/Bing is on the rise

According to IgnitionOne’s research, there was more competition in Yahoo/Bing auctions after their recent best practice and broad match keyword push. Using broad match keywords as a stepping stone into exact match, there has been an increase of 40% year on year for these types of keywords even though traffic has barely increased. This change may be the reason for a 46.4% increase in US search advertising spend compared to Google’s growth of 26.6% year on year. With this jump in spend, Yahoo and Bing have had their best quarter since the two joined forces and now make up 21.2% of the market share.

Mobile and tablet search activity continues to accelerate

Though only 12.3% of the total search advertising spend in Q1 was allocated to mobile search, mobile clicks were up 246.1% year on year and impressions were up 119.9%. It is no surprise that mobile search is on the rise, and the adoption of tablets are adding to our need to search on the go. In fact 67.4% of the mobile search advertising budget in the US was attributed to search on tablets. 

As tablet click through rates are 0.6% higher than PC rates of 2.5%, this will definitely be an area that will continue to grow in terms of spend over 2012. With a reliance on first-position search advertising, small screen ads would have greater results even though the fight to be at the top is more difficult. This could indicate why mobile devices with full browsers almost doubled the PC click through rates at 4.4%.

Overall, the growth of advertising spend is encouraging. Google is still the leader in the paid search space but the move of Yahoo and Bing to merge as a single force seems to be paying off.  With our continued adoption of tablets, mobile search will rise throughout 2012. Until these devices saturate the market, this rise will continue into the foreseeable future.