The research firm, HitWise is reporting a record drop in Paid search advertising over the last few weeks.

HitWise reports that the share of search traffic to websites generated from paid listings has dropped to about 7.25% over the four weeks ending May 9th, down from 9.8% during the same period a year ago, representing a decline of 26%.

“””This trend is apparent across 16 of the 17 Hitwise parent categories (i.e. Automotive, Food and Beverage, Health and Medical, etc). The only category that didn’t see a decline in paid traffic was Education, which received 1.45% of search visits from paid clicks compared to 1.39% last year.”””

“””The share of paid clicks to Insurance websites was down 22% for the year, Retail 500 down 20% and Travel Agencies down 25%. The steady and consistent decline across categories indicates that this is not an isolated or seasonal variance.”””

According to the author of the report, Heather Hopkins said:

“I looked at the top search terms sending visits to the three categories to compare rates of paid clicks year over year. Consistently, brand name terms (such as “travelocity”, “orbitz” and “walmart” saw a sharp decrease year over year in the share of paid clicks. For example, 35.75% of clicks on searches for “orbitz” were on paid listings in the four weeks to May 9, 2009. This compares to 46.56% in the same four week period in 2008. This represents a 23% decrease year over year.””

“””Even more extreme, 0.83% of searches for “home depot” went to a paid listing in the four weeks to May 9, 2009 compared to 39.06% in 2008. Similarly, “usaa” saw 0% of clicks on paid listings in the last four weeks compared to 28.88% in the same period in 2008.”””

“””Referrals from search engines continue to climb but the proportion of clicks going to sponsored or paid listings is decreasing. This is no doubt a result of cutbacks in marketing spend due to the recession.””

If correct this could explain Google recently announced aggressive moves that would open up trademarked keywords to bid by rivals and allowing trademarked terms in ad copy.

The news if correct, would not be good for domainers.

However since the author is looking at paid search as a percentage of total search, additional overall search volume from year to year, could account for some of the loss.

If paid search is down, let’s hope it will recover with the economy and isn’t as the author suggests a permanent loss of traffic or a change in search patterns.

Let’s also keep in mind that in Google’s last quarterly report for the quarter ending March 31, 2009, it reported paid search clicks were up 17% for the year and 3% since the 4th quarter, although the author’s comment this change happened recently and after the quarterly results were issued