Search vs. Display Ads: The Gap Widens

Online advertising, as a successful platform that facilitates the buying and selling of advertising space on websites; continues to grow rapidly as it attracts more and more web-surfers through the promotion of goods, services, and ideas. Like modern finance, this critical financial internet-component, which now accounts for almost a seventh of all advertising spending and contributes to the majority of revenues for most websites, relies systematically on advanced economic and statistical methods. Based on statistics, consumers are now spending more time online on their PCs, and participation-wise, the numbers are in upward trajectory as additional devices such as smartphones, and televisions are connected to the web.

The Wall Street Journal is reporting that despite the softening economic conditions, spending on Internet advertising rose 20% in the U.S. in Q2′08. In fact, more advertisers are now willing to spend money on search ads. However, not every form of advertising is sustaining same growth levels. The gap between spending on simple search ads, where Google Inc.’s (GOOG) dominance is already known, and spending on flashier display ads (a spending projected to reach $5.2 billion this year, up from $4.5 billion in ‘07) is currently widening.

According to research firm eMarketer, search-ad spending will reach $10.4 billion this year, double what will be spent on display ads.

With search-ads growing faster than display-ads, Google, which controls more than 70% of the U.S. search-ad market, stands to benefit the most as search ads will represent 42% of all advertising spending whereas display ads will account for just 21% of all online ads. This underscores the fact that business owners and corporations will stick to what they view as the safest way to reach online customers directly and spend the majority of their marketing budget toward the plain text ads that appear on search-result pages.

The trend, notes the WSJ - comes as Google rivals Yahoo (YHOO), Microsoft (MSFT) and Time Warner Inc.’s (TWX) AOL have invested billions of dollars in new display-ad technology aimed at delivering more relevant and engaging ads to users on their sites.

Comments

[AlphaNumeric#1:]

If advertisers are smart, that trend will change quickly. Here's why....

mattlillig.blogspot.co...

"When marketers supplement search with display impressions, they get a significant lift in conversions. Unfortunately, most advertisers that run both search and display are unaware of this...” The study demonstrated that "users exposed to both search and display ads convert at a higher rate: an average of 22 percent better than search alone and 400 percent better than display only."

Advertisers who focus on only search are risking a 22% lift in conversions.

2008 Sep 05 03:34 PM

[mildredlufwoka:]

Very nice.
Keep it up.

2008 Sep 18 05:55 AM