Google continues to dominate search, but sponsored links are down

Author: Alecia Pirulis

The web tracking service Compete posted some interesting data on Seeking Alpha today looking at the performance of search engines in April.The story is of one giant and a bunch of dwarfs as Google extended its dominance as the leading search engine.The share growth came during a month that search volume dropped 5%. In a development that has significant economic consequences, Compete noted that the rate of sponsored referrals had dropped at most of the sites. Google for instance, was down 0.6%.Fewer sponsored referrals and fewer searches put significant pressure on revenue. The lesson appears to be that EVERY part of the consumer economy was inflated, and that even the most efficient marketing channels are experiencing a correction.

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However, amid discussions of a slow growth in sponsored referrals relative to query volume, Google’s (GOOG) rate of sponsored referrals dropped a sharp 0.6% in April, possibly attributable to search marketer cutbacks given the uncertain economy, as well as improved targeting from the search engines. Google maintained impressive 9+ billion queries or 73.3% of share.
Yahoo! (YHOO) also saw a sharp decrease in sponsored referral rate, falling to 6.3%, while query volume and market share were essentially flat. Again, improved targeting and economic conditions appear to be the cause.