Not too surprisingly, paid search spending was down 8% in the 4th quarter of 2008.  There are two reasons for this.  First, companies are cutting budgets.  So, whereas a company had a monthly Google budget of $5,000, it may now be capped at $4,000.  Just a sign of the times.  But also, searches at Google were down 3% in November.  This reflects the trends of consumer spending–if they aren’t thinking about trips to Cabo, then they aren’t searching for them either.

Clearly, search and the economy are interwoven. But don’t worry, search is alive.  According to Comscore Americans conducted 12.3 billion searches were conducted by Americans in November 2008.  We’re talking government bailout type numbers!  OK, not quite.  Google Sites led the US core search market in November with 63.5% of the searches conducted, followed by Yahoo Sites (20.4%), Microsoft Sites (8.3%), Ask Network (4.0%), and AOL LLC (3.8%).

Here are some tips to optimize your Pay-Per-Click budget:

• Use Google Insights to learn more about consumer trends.  If you are paying attention to your customers, then some of this might be obvious already, but you can adjust your ad spending accordingly to capitalize on product interest. Be careful, Google Insights can be addicting. Here are two trend charts as examples:

• Don’t be afraid to pay more for “long tail” terms.  Long tail terms are searches that are more than 4 words long, and indicate that someone knows specifically what they are looking for.  If I own a service that only provides foot massages for Saint Bernards, and someone in my geographic area is searching for “good Saint Bernard foot massage services”, then you can be damn sure that I’m willing to pay $20 per click to get that person to visit my website (assuming that I charge more than $5 per paw).
• Geo-target your ads.  If you have a national product and run PPC in all 50 states, you can include the name of the state in your ad.  This will increase click-through rates by speaking more directly to the consumer.
• Be topical.  Think about what is on the mind of the consumer?  Is it the time of year or holiday?  How about the economy?  Consider what “buzz words” you can include in your ads that make your product seem more relevant to the consumer.