Adgooroo Tracks Dip in Search Engine Advertising

Search engine advertising declined during second quarter, according to the Chicago-based market research firm Adgooroo LLC.

Advertising growth was generally flat for Yahoo, down slightly for Google and significantly lower for Microsoft during the second quarter. Adgooroo described the second quarter as particularly quiet in terms of search engine advertising.

The number of ads shown on the Google search engine dropped by 40% per keyword in the last six months, based on tracking conducted by Adgooroo. It reported the average number of ads per keyword for Google declined from 6.5 to just 4 during the last six months.

The steep decline at Google may in part be due to an effort to improve overall response by eliminating less effective ads. The theory being that the remaining ads should pull higher click through and possibly conversion rates, according to Adgooroo’s analysis.

Google and Yahoo saw a better overall performance than Microsoft during the second quarter. Google experienced a 6.4% decrease in its base of search engine advertisers, while Yahoo achieved a fraction of 1% growth in its advertising base. In contrast, Microsoft experienced a 20% drop in advertising clients.

During the last 12 months, Google saw an 8.5% decrease in advertiser growth. Yahoo had a 9.8% growth in advertisers and Microsoft’s MSN search engine experienced a 6.7% decline in advertisers.

AdGooroo’s report speculated that as the number of search engine advertisers declines, so would price bids for placement in search results. It predicted search engine advertising revenues could “stagnate.”