List of Posts

Posts Tagged ‘search advertising’

‘Glimmer of hope’ for online ads in recession Monday, December 1st, 2008

Everyone agrees advertising overall is tanking as a result of the ‘GFC’ (global financial crisis), but how online advertising will be affected is a matter of intense debate. The online industry, naturally, is bullish on the prospects for online ad spend growth, but what do the battered finance and political media think? The Economist entered the debate last week, saying that although online ad spending in the US fell by 27% during the dotcom recession, ”the web has changed a lot since 2002. Back then, gaudy display “banners” on web portals such as Yahoo! and MSN were the preferred technology. These still exist, but they now account for less than 20% of online ad spending.”

As they pointed out, more than 50% of online ad spend now goes to search advertising, while in brand advertising, rich media ads are taking over from banners. Because these forms of advertising are easily tracked, spending on online advertising is now “much less speculative, so that it starts to be treated instead as a cost of sales. This is one reason why online advertising should suffer less than other sorts.”

This still leaves the problem of how advertising spend is transferred from traditional advertising to online. As the Economist points out, “At the beginning of the year Jeff Zucker, the boss of NBC Universal, a big television and film company, told an audience of TV executives that their biggest challenge was to ensure ‘that we do not end up trading analogue dollars for digital pennies’. He meant that audiences were moving online faster than advertisers, thus leaving media companies short-changed. Now, near the end of the year, the situation looks even worse, as the recession threatens to turn even the analogue dollars into pennies.”

The Economist points out that online traffic is moving towards sites where advertising has so far proved ineffective - such as user-generated content havens like YouTube and social networking sites such as MySpace and Facebook - “and is therefore cheap. This, says Mary Meeker (an Internet analyst at Morgan Stanley), presents an opportunity for innovation and arbitrage by clever marketing managers as they cut their conventional ad budgets. It may also provide a glimmer of hope for the advertising industry as it enters recession.”


Online search growing, but less effective Friday, November 28th, 2008

Australian search advertising should total $869.7 million in 2008, making it the fastest growing segment in the local digital media advertising industry, according to the Australia Search Advertising Market 2008-2012 report released today by Frost & Sullivan.

Keyword sponsorships continue to lead demand accounting for 51% of total revenue ($443 million), followed by online directories ($264 million) and contextual searches ($163 million).

The study identifies that 75% of advertisers are now spending more than 10% of their total media budget on search related activities. This compares with 65% 12 months ago.

However, the key benefits of search advertising, including increased leads, conversions/sales and high return on investment, were all down on last year’s results. A total of 59% of brands that used search ads said it resulted in increased leads, down from 66% last year, while 44% said it increased conversions/leads compared to 49% last year. Only 25% of the advertisers surveyed said search advertising achieved a high return on investment, down from 31% last year.

Frost and Sullivan suggests advertisers will turn to search ads in the economic downturn because of its cost effectiveness.