Not what it used to be

Paid search traffic took a major hit in the past year, writes the New York Times, citing a recent report from Hitwise.

In the period ending April 2008, nearly 10% (9.84%) of registered search engine traffic came from paid clicks. But in the four weeks preceding May 9, 2009, this figure declined by 26% to 7.25%.

The trend is noticeable across all categories - with the sole exception of education. Paid search results to these sites increased from 1.39% to 1.45%.

Paid clicks to major retail sites and travel agencies were down 20% and 25% respectively.

Brand names like Orbitz or Walmart saw strong declines in their share of paid clicks, while searches for Home Depot registered a huge decline in paid clicks: just 0.83% of searches went to a paid listing in the last four weeks, compared to 39% a year ago.

This decline can be partly explained by the current economic climate, which drove companies to slash spending on search marketing. Google’s latest quarterly earnings report noted a slight increase in paid clicks across all of its AdSense partners (3%) in the last quarter of 2008, but did not give detailed statistics about paid search traffic.

Reduced search spend could also mean that some large companies, seeing that they are already are the #1 search term for their respective brands, decided to pull back. And many retailers have been shifting their budgets away from search-engine marketing and toward email and social media marketing.

Smaller companies that were formerly shied away by the competition may use the downturn to break into new markets and expand their spend on search marketing.

In related news, starting May 1, Amazon stopped paying referral fees to Associates that use pay-per-click programs on search engines to send traffic to amazon.com, amazon.ca or endless.com.