"Search Will Still Trump Social in Online Ads This Year"

Facebook may be growing like a weed, making big acquisitions, and prepping for a blockbuster IPO, but a new study indicates Google has little to fear for its search ads just yet. The study, due out Tuesday morning from Adobe’s digital marketing business unit (formerly the digital marketing firm Efficient Frontier before Adobe acquired it), also indicates that investor concern about Google’s declining price per click ahead of its first-quarter earnings to be announced April 12 may be overblown.

The quarterly study shows search ads account for the majority of online ad spending

because they produce the greatest return on investment for marketers. So far this year, search ad spending is up 16% in the U.S. from a year ago. Partly because of those lower click prices–in turn, partly because of a boom in mobile search ads, which cost much less than desktop search ads–ROI is up 11%.

While the 5% estimated drop in search ad prices spooked investors in Google’s fourth quarter, Justin Merickel, director of new product innovation for Adobe’s digital marketing business, says it helped boost clicks by 21%. He views that as a positive for Google. “As a marketer, the better ROI I have on Google, the more I’m going to invest,” he says. “Google is purposely generating stronger yields.”

The increase in search ad spend comes despite a huge increase in spending on Facebook ads. The Adobe study estimates that’s up 93% from a year ago. But that’s also just 3% to 5% of overall search spend, and less than mobile search ads alone.

For the rest of the year, the study reckons, search ad spend in the U.S. will rise 10% to 15%. Because Google’s prices have come down while Bing/Yahoo‘s have risen, Merickel says, the much smaller rival is at risk of losing market share because its own search ad prices have risen 18% from a year ago.

Some other interesting tidbits from the report:

* Mobile ad spending hit 8% of all search spend in the first quarter, up fourfold from a year ago. Tablets accounted for more than half of that share. That’s likely to continue because 30% lower costs per click (CPC) on tablet search ads than on desktops, despite comparable rates of conversion to a sale or other marketer goal, mean marketers will view these ads as a bargain.

* Bing/Yahoo’s advantage over Google on search ad ROI has vanished thanks to Google’s lower prices and an 18% jump in Bing/Yahoo ad prices.

* A key reason for Google’s growth in clicks is changes in its ad algorithms, including offering more so-called site links, or additional links to relevant marketer pages, in response to search queries.

* Engagement on Facebook’s posts jumped 176% from a year ago, thanks to the new Timeline format that apparently encourages more people to click on, share, or otherwise interact with the posts.

* Tablets and other mobile devices are expected to reach 15% to 20% of overall search ad spending by the end of the year.

* Facebook cost-per-click rates on self-service ads (those appearing on the right side of the page) have risen 40% a quarter for the past three quarters. But with lower CPC on Sponsored Stories, a newer kind of ad, those rates may fall temporarily. And Merickel raised a continuing challenge for Facebook ads: ”There’s no intent [to buy] on Facebook like there is in search,” says Merickel.