The report, released by online marketing company, Efficient Frontier, states that during Q4 of 2011 search spend continued to increase in both the U.S. and U.K.

Increase in search spend in the UK by quarter. Source: Efficient Frontier

Retail spend in the U.S. grew by 18% year-on-year and 40% quarter-on-quarter, indicating that the spend increases substantially during the last quarter of the year. Retail growth in the UK was not as good, and this was reflected in the search spend too, which grew by just 10% year-on-year in the country.

Although Google accounted for 80% share of spend in Q4, Yahoo! and Bing clicks were found to be 14% more valuable and showed 9% higher return on investment than Google. The click-share of Google has, however, gone up by 2.5%.

Search CPCs dropped by 5% overall, mainly due to an increase in mobile advertising and better ad delivery.

Mobile ad spend now accounts for 7-8% of all ad spend compared to just 2% a year ago. Of this, tablets account for 50% of the share. Google drives 96% of mobile search ads while Yahoo! and Bing have just 4% share of the market.

In 2012, mobile search spend is expected to account for 16-22% of all paid clicks as users gradually shift from desktops to mobiles. For the same reason, search CPCs are also expected to fall by 4%.

Projected mobile search spend forecast by the end of 2012. Source: Efficient Frontier

Facebook accounted for 2.7% of biddable online spend in Q4, as marketers now spend a larger amount on social networks. Yahoo! and Bing are set to increase their ad inventory, while Facebook is expected to reach 5% of all online ad spend in 2012. Other social networks, such as Google+ and LinkedIn are also set to grow further and deliver more ad impressions.

A vast number of mobile phones do not allow JavaScript to run on their browsers. Furthermore, even with those that do allow JavaScript, many do not allow cookies. In fact, a number of mobile network operators block cookies as well as session details from being passed on to third parties such as Google AdWords.

Without cookies, the vast majority of conversions resulting from AdWords ads on mobile devices will go undetected. This is a serious issue, as it implies that the ROI calculations many mobile advertisers make for their campaigns will be far from the actual figures.

Not only is this a serious problem for Google, who has traditionally bragged about the exceptional accountability and reporting capabilities of its advertising platform, but it is also one that cannot be solved by the search giant.

Google needs to either find a better, more innovative way to provide accurate conversion tracking for mobile ads, or advertisers will shrug their shoulders and accept it as a flaw till a better, more reliable system is introduced, probably by a network operator.

An account manager at Google AdWords has confirmed this is the case. Her reply to our query is quoted below:

“A significant percentage of mobile browser and carrier combinations do not support cookies. Google adds cookies to a user’s mobile device when he or she clicks on an ad to track conversions. Therefore, if users are using mobile browsers or carriers that do not accept or support cookies, they will not be included in your conversion tracking statistics.

Additionally, cookies on mobile phones expire faster than the ones created for PCs. Therefore, a significant number of conversions for your site may go unrecorded after a certain period of time. When viewing conversions for a specified time period, note that conversions are assigned to the date on which the ad click occurs, not the date on which the conversion occurs. In addition, we will not be able to report conversions for users who disable cookies.

Conversion tracking is also not supported when users disable images on their mobile phones.

Although Google cannot record every conversion due to the reasons mentioned above, your conversion rate, cost-per-conversion, cost-per-transaction and value/click are adjusted to reflect only those sites from which we can track conversions.“

Update:

The post has been updated to clarify that the lack of JavaScript support on a mobile device is not a problem in and of itself. The problem lies in the cookies being rejected by mobile operators. Since the time of publication of this post, Google has updated its conversion tracking platform, and now offers an improved solution for conversion tracking on mobile searches.