Ad Spending Among Small Businesses Rises in Q2, Report Finds

Yahoo and Google have a lot to celebrate as cost-conscious businesses return to online advertising spending, according to The WebVisible Report: State of Small Business Online Advertising Q2 2010.

Small businesses continue to increase their search spending over last year, while Yahoo drew some of that spend away from competitors Google and Ask, according to the latest quarterly report from online marketing WebVisible. The average small business advertiser spent $2,231 on search advertising in Q2 2010 - up by 1.4 percent from Q1 2010 and by 159 percent over Q2 2009. This continues the year-over-year (YoY) gains seen in the last several quarters - YoY spending was up 91 percent in Q1 2010 and 111 percent in Q4 2009.

Consistent with previous quarters, the most popular advertiser categories in Q2 2010 were attorneys, general contractors and dentists. Air conditioning contractors, landscapers, and businesses offering irrigation services, fencing and awnings increased seasonal spending from Q1 to Q2 2010. Businesses offering jewelry, loans, mortgages and job recruitment services increased spending significantly from Q1 to Q2 2010.

Nearly half of all clicks - 43 percent - resulted in a web conversion in Q2 2010, up by 22 percent over Q1 2010 and 39 percent over Q2 2009.  Conversion activity more than doubled for form fills, video views, printed driving directions and bookmarking in Q2 2010 versus Q2 2009, which WebVision said suggesting users are taking advantage of additional website options provided by advertisers. The percentage of clicks resulting in a phone call to the advertiser increased by 29 percent over the previous quarter and by 58 percent over the same period last year.

"There are several findings in this report that could indicate a recovering economy - search ad spend among small businesses continues to increase over last year, categories like jewelry and job recruitment services have increased spending over the last quarter, and consumer response rates continue to rise," said WebVisible CEO Kirsten Mangers.  "Over the past year, conversion activity increased on almost all Website actions - filling out an online form, watching a video, bookmarking a page or printing driving directions.  For advertisers this is great news.  The more options a company provides, the more actions a website visitor will take - giving advertisers multiple opportunities to establish a connection with each potential buyer."

In Q2 2010, spending shifted toward Yahoo and away from Google and Ask, while Microsoft's Bing remained flat. Yahoo gained 4.0 percentage points in share, while Google lost 2.0 percentage points, Bing lost 0.6 and Ask lost 1.4. Click-through-rate (CTR) was up for all the search engines when compared to a year ago, but Yahoo was the only one to experience an increase over the last quarter. Yahoo's CTR for Q2 increased by 35 percent over Q1 2010 and compared to Q1, Google's CTR was down 4.4 percent and Bing's was down 6.6 percent. CPC (cost per click) increased by 23 percent on Yahoo and by 9.8 percent on Bing, while Google showed the most stable CPCs, with a quarter-over-quarter (QoQ) increase of just 2.2 percent.