A study by SEM firm Efficient Frontier takes a look at the recent downturn in ad spend, and notes that advertisers haven’t gotten stingier, they’ve just gotten more selective with their ad dollars.

Looking at 84 billion ad impressions and 785 million clicks from Q4 2008 through Q1 2009 from its clients’ sites, Efficient Frontier noted a 3.3% reduction in ad spend, but a 10% improvement in ROI. Return on investment increased 30% from January to February alone, and, possibly as a consequence of its collective success, spend increased 6% from February to March.

Quarter-over-quarter, ROI has improved for all search engines. Google Search, Microsoft Live Search and Yahoo Search saw a 10 percent, 43 percent and 12 percent improvement in ROI respectively, due to advertisers shifting towards efficiency in their marketing campaigns.

Why? Due to the economic downturn’s increased stress on revenue, advertisers are shifting to a more short-term focus. Businesses are responding to consumers’ emphasis on price over brand in their own purchasing decisions, and also retracting from spending on brand, an investment whose benefit is realized over the longer term. With respect to online advertising, CPM has increasingly given way to CPC and CPA.

Another interesting statistical tidbit from the study: the number of search ad impressions:

In Q1 2009, overall impressions were up 11 percent, despite the decline in spending. This indicates that more people are searching online and that search engines are optimizing unused inventory by taking such actions as removing minimum bids. On a year-over-year basis, Google Search experienced 20 percent growth in impressions, while Microsoft Live Search saw 10 percent growth in impressions. Google Content trended down in impressions, declining 57 percent, due to continual improvements that enabled advertisers to better target users.

Google is expanding the utility of its search inventory, a bit at the expense of its content inventory, a large portion of which it, naturally, has to pay out for.

Full report download available here.

This entry was posted on Thursday, April 16th, 2009 at 5:08 pm and is filed under Online Advertising. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.