By Rene LeMerle

For the best part of 2008, we heard the common tale of marketing budgets being shifted online, as companies sought affordable and measurable results. It seems the retail sector was no exception.

A report out by search management firm SearchIgnite suggests retail paid search grew 12% in Q4 2008, compared to 2007’s fourth quarter results. The growth trend was consistent across all the top three search engines (Google, Yahoo! and MSN).

Of the three months in Q4, Nov 2008 was the stand out, experiencing a phenomenal increase of 43%, which suggests retailers we going on the offensive to leverage Black Friday/Cyber Monday activity. Roger Barnette, president of SearchIgnite said:

Retailers were more aggressive with their paid search spend in the first half of the quarter compared with the year earlier in an effort to capture more consumer dollars ahead of the holidays.

Sales reports around the start of the holiday period were mixed, preThanksgiving down 4%, and Cyber Monday only up 1%. It’s not surprising then that December’s paid search growth was only 14%, as retailers remained wary about spending.

The report also observed a consistent conversion rate YOY (year on year) with only 3% growth, but the interesting shift was in average order value (AOV)—which dropped 10%.

2009 will see more retailers turning to paid search to drive sales, but as the report highlights, changing consumer habits based on the economic climate will force them to work harder and smarter to maintain revenue levels.

Rene LeMerle is the VP of Marketing at ineedhits.com, a leading provider of results driven Search Engine Advertising and SEO services.