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Report: Search advertising to drop 20%

A new report predicts that the U.S. search advertising market will contract by as much as 20% from the first quarter a year ago the fourth quarter of ‘08. The report, from Clickable, a search-advertising services company, shows the impact of the economic downturn on the small and medium-sized businesses that do most of the search advertising. It probably won’t shock you that the outlook is grim.

The two most significant bullets for me:

* Conversion rates are down, but clicks have gone up: evidence of an Internet population researching more deals during the past holiday shopping season. The research and buying cycle is lengthening, with greater focus on savings and incentives.

* 2009 Q1 spending is declining versus 2008 Q4; early signs indicate up to a 20% decrease, but more pronounced in e-commerce.

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