October 19, 2009

PriceGrabber's Holiday Consumer Spending Forecast: How Full or Empty is Your Glass?

PriceGrabber has released their holiday consumer spending forecast and it's clear that shoppers are hankering down on the ol' family budget. It's not quite as severe as last year, but consumers seem to be planning their holiday spending with more diligence this time around. In order to spend smarter, they're starting earlier, doing their research and looking for deals. Let's dig in.

70% of consumers are conducting product research and comparison shopping online. This has nearly doubled from last year, which was 38%. That behavior is already in progress. 30% have already begun shopping, most of them beginning this month (October).

Fewer consumers are planning to spend less. This year 53% plan to spend less than they did last year. That's down from 71% of consumers who were asked the same question in 2008. It's good news that the number has dropped, but retailers need that number to drop even more.

The top 3 ways consumers plan to save are:

research and comparison shop online (70%)
shop at discount stores (50%)
use online coupons (39%).

If you have a clearance, discount or outlet part of your e-commerce site, you'll want to promote it. 50% of consumers are planning to shop at discount or outlet stores this year, while only 43% did so last year.

Women will make more of an effort to save than men. Female consumers dominate every penny-pinching category except for research and comparison shopping. 72% of men and 67% of women will research and compare online this year.

When it comes to how much will be spent, about 53% will spend less. 70% of those surveyed plan to spend less than $1,000.

The top 3 reasons for spending less this year should come as no surprise:

increase in prices of necessities (48%)
lack of confidence in the economy (45%)
making less money this year (38%)

43% of consumers expect to shop on Black Friday or Cyber Monday. Of those, 79% plan to spend on Black Friday and 66% plan to make a purchase on Cyber Monday.

29% of consumers are planning to purchase gifts for fewer people. That's more than double last year's number, when only 10% crossed names off their gift-giving lists. Acquaintances, coworkers and service providers are most likely to get the axe at 57%, 53% and 44% respectively.

We just threw a ton of numbers at you, but if you're hungry for more, there's a ton more data where this came from. Check out PriceGrabber's full 16 page report (PDF) here.

Posted by Nathania Johnson at 2:24 PM | Permalink | Comments (0)

July 21, 2009

Search Spend Projected to Grow Despite Fears

The latest projections are showing that ad spend on search will continue to increase in the coming years. But those projections come with data showing marketers are not so confident in the performance of search.

First up, the projections. Search tops the list of interactive marketing categories for projected ad spend and will continue to do so for the foreseeable future. The following numbers are from Forrester.

The next set of projections are from [x+1]. It shows that the majority of marketers plan to maintain or increase SEM spending this year.

But, as mentioned above, marketers aren't feeling great about search. The lack of confidence data also comes from [x+1]. Survey participants were asked to rate their expectation of search ad performance on a scale of 1-7, with 7 being the best.

Ouch.

How are you feeling about search ad performance? Share your projections by leaving a comment.

Posted by Nathania Johnson at 2:11 AM | Permalink | Comments (3)

July 9, 2009

Social Network Ad Spend to Dip in 2009, Pick Back Up in 2010

eMarketer has released projections showing social network ad spending taking a dip in 2009. They attribute the decline to difficulties over at MySpace, as they try to maintain a presence in a niche being taken over by Facebook and the yet-to-be monetized Twitter.

"The expected rebound in spending will come as more companies focus on creating and implementing an overall social marketing strategy," says Debra Aho Williamson, eMarketer senior analyst and author of the new report, Social Network Ad Spending: A Brighter Outlook Next Year. "And it is a clear indication that the experimental phase of social network marketing is finally drawing to an end."

However, the downturn isn't expected to become a trend. Instead, it will be a blip on an otherwise steadily increasing interest in social network advertising. Should Twitter introduce advertising, social network ads will probably take on a life of their own.

"Facebook, once a distant second to MySpace, has outperformed its rival in nearly every measure of usage--and is on track to surpass MySpace in ad spending by 2011," says Ms. Williamson.

Posted by Nathania Johnson at 1:18 PM | Permalink | Comments (1)

June 27, 2008

Local Advertisers Shifting Dollars to Internet

This year, local advertisers are expected to shift $13.1 billion of their budgeted funds to the Internet, according to Borrell Associates. The number is up 50% over last year.

In 2009, local online ad spending is projected to grow another 40% to $18.2 billion in 2009. By 2012, the growth in spending will eventually slow down and plateau at about $23 billion, but still average 15% growth over the next four years.

Online advertising is cheaper than traditional methods of marketing and is thought to be the reason for the change. According to Borrell, internet CPMs average $3.65, the lowest of any media, while an offline Yellow Pages ad carries an average CPM of $9.29.

The numbers seem to be in line with recent projections for global internet advertising, expected to exceed $106 Billion by 2012.

Of course, search engines are gearing up for the increased ad spends. Google recently announced its brand new media planning tool, Ad Planner. Microsoft recently acquired Navic Networks, a TV ad company that will likely help Microsoft clients integrate online and offline campaigns. And Yahoo inked an online and mobile advertising partnership with Publicis.

Posted by Nathania Johnson at 9:57 AM | Permalink | Comments (0)

June 25, 2008

Global Internet Ad Spend to Exceed $106 Billion by 2011

IDC has released new projections for global internet ad spending. This year, they expect internet advertising to reach $65.2 billion, which accounts for roughly 10% of all ad spending. And despite current economic woes, spending will continue to increase. By 2011, the worldwide spend is expected to exceed $106 billion.

Earlier this month, IDC released data showing that online advertising was up 23.9% in the first quarter of 2008 over the same period in 2007.

"Compared to more mature types of advertising, Internet advertising is growing at a phenomenal rate," said John Gantz, chief research officer at IDC. "But Internet advertising is still relatively new and growing from a much smaller base. By the end of the forecast period, spending for Internet advertising will trail direct mail – the third largest form of advertising – by more than $30 billion, while spending on TV and print ads will each be nearly twice as great as for online ads. The long-term opportunity for Internet advertising can be seen in the disparity between per capita spending. Total advertising revenues equate to more than $105 per inhabitant of the planet, while Internet advertising revenues are less than $50 per active Internet user."

Posted by Nathania Johnson at 11:58 AM | Permalink | Comments (0)

June 10, 2008

Online Ad Spend Intact Despite Weakening Economy

Though the economy has been a source of financial pain in some industries, the first quarter of 2008 saw online advertising remaining quite intact. According to new data released by IDC, total revenue increased by 23.9% to $7.1 billion in the first quarter. That was up from $5.7 billion in Q1 of 2007.

IDC projects online advertising to continue growing at a rate of 15-20% this year despite their expectation for ad spend across media to decline by 7%. IDC anticipates online advertising to double over the next five years.

"What happens is that the current economic crisis puts pressure on advertisers to save money and find more effective marketing channels," said Karsten Weide, program director, Digital Marketplace and New Media at IDC. "Effectively, the crisis accelerates the shift of advertising budgets from traditional media into new media."

Posted by Nathania Johnson at 9:24 AM | Permalink | Comments (0)

May 22, 2008

Spending on Mobile Search Ads to Reach $2bn by 2013

Juniper Research has released data about search ad spending in the mobile market. Here's what you need to know.

2008 mobile search adspend will reach $445 million, which is 34% of total mobile adspend.
Mobile search revenues (including data charges) will reach $4.8bn by 2013.
Both mobile search adspend and total mobile adspend will be highest in the Far East/China region, followed by Western Europe and North America.

According to Juniper Research's Principal Analyst, Dr Windsor Holden, "While mobile advertising was historically dominated by campaigns conducted almost exclusively via SMS, the mass adoption of 2.5G and 3G handsets -- combined with the development of applications enabling targeted, instant measurement and frequency capping -- mean that we now have a situation where consumers can receive personalised advertising across a variety of rich media delivery channels."

What do you think of this data? Are you exploring the mobile search ad space? Leave a comment!

Posted by Nathania Johnson at 10:57 AM | Permalink | Comments (1)

February 25, 2008

Media Spend on Search, Verticals, Continues to Grow

Search made up 31 percent of the $735 million in media billings in 2007 by Microsoft-owned Avenue A | Razorfish, second only to ads on vertical sites at 39 percent of spending, according to Jeff Lanctot, senior VP of Global Media, who published details of the agency's spending in the latest Digital Outlook Report. That's up from search's 28-percent share of billings in 2006.

Search, at $227.8 million, and verticals, at $286.6 million, were the big winners last year, while the agency's media spending slowed in both portals, at $139.6 million, and ad networks, at $80.8 million.

Posted by Kevin Newcomb at 1:11 PM | Permalink

Kelsey Group Predicts Growth in Interactive, Directional Ads

Interactive advertising revenue in the U.S. will grow from $22.5 billion in 2007 to $62.4 billion by 2012, according to a new Kelsey Group report. Interactive advertising revenue, which Kelsey defines as search (including local search), display advertising, classifieds and other interactive ad products, grew its share of global advertising revenues from 6.1 percent in 2006 to 7.4 percent in 2007. By 2012, Kelsey Group analysts expect the interactive share of global ad spending will reach 21 percent.

"Growing from 7.1 percent to 21 percent is a lot. We're saying that there will be a big shift to digital advertising markets," Matt Booth, SVP interactive local media for Kelsey, told ClickZ News. "The global shift to digital products will be the most interesting and we'll see what kind of global company start-ups will go after that acceleration of dollars moving to digital products."

Directional advertising, which comprises local search, print Yellow Pages and Internet Yellow Pages (IYP), is forecasted to grow from $33.3 billion in 2007 to $41.4 billion globally in 2012, a 4.5 percent compound annual growth rate (CAGR). Local search revenues will grow from $2.1 billion to $6.6 billion (25.5 percent CAGR), IYP revenues will grow from $3.7 billion to $9.2 billion (20.1 percent CAGR), and Print Yellow Pages revenues will decline from US$27.5 billion to $25.6 billion (-1.4 percent CAGR).

Posted by Kevin Newcomb at 10:55 AM | Permalink

October 16, 2007

Is Yahoo Gaining Momentum?

While Google clearly retains the dominant market share among search engines, it appears that Yahoo showed some strength this summer with "impressive momentum," according to a report by SearchIgnite and RBC Capital Markets.

"Relative to its own market share, it was an impressive gain," said Roger Barnette, president of SearchIgnite. "It appears marketers are becoming more comfortable with the Panama platform. We expect this trend to continue in the fourth quarter."

The research shows that Yahoo posted significant quarter-to-quarter gains in both share of search ad impressions and percentage of media spend. At the same time, Google's share of impressions dropped considerably during the summer, but rebounded due to back-to-school traffic in September. Yahoo was apparently unaffected by the seasonal shift.

Spending on Yahoo outpaced the overall spend increase, showing that as marketers increase their ad spend, they are more likely to allocate that budget to Yahoo. Overall spend increased by 1.8 percent from the second quarter, while spending on Yahoo was up by 7.8 percent, and spending on Google was up just 0.8 percent.

"This should tell marketers that if they're not looking at other engines, they might want to consider doing that. Many of their competitors are," Barnette said.

The data comes from more than 500 clients of SearchIgnite and its sister company, 360i. This is the fourth quarterly report, intended to measure the changing budget allocations between Google, Yahoo, and Microsoft Live Search/MSN. SearchIgnite is especially interested in tracking the effects of Yahoo's implementation of Panama as well as changes Google has made, such as the shift to universal search.

One surprising point for Barnette was the lack of a noticeable uptick following Google's algorithm adjustment that tweaked the way the top ad position is calculated. Both Google's average cost-per-click (CPC) and effective CPM were flat after the late August move, where previous changes had boosted those metrics more dramatically, he said.

Posted by Kevin Newcomb at 9:29 AM | Permalink

October 5, 2007

Report: Online Ad Growth Slowing

During the first six months of 2007, online ad revenues grew by 26.4 percent over the same period last year to nearly $10 billion, according to the latest report from the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC).

According to ClickZ News: Little has changed in the distribution of revenues across search, display and other channels. Search spending during the year's first half accounted for 41 percent of all revenues, compared with 40 percent for the year-ago period. In raw dollar terms, search grew 29 percent to $4.1 billion. Display advertising meanwhile increased from $2.4 billion, or 31 percent of the pie, in the first half of 2006, to $3.2 billion, or 32 percent, for the 2007 period.

Posted by Kevin Newcomb at 10:24 AM | Permalink

October 2, 2007

Study Shows Many Plan to Spend More on Search in 2008

A significant number of advertisers plan to increase both their search ad spend and SEO budgets next year, according to a MarketingSherpa report. In a survey of more than 2,400 marketers who conduct or supervise search marketing in-house, as well as more than 700 agency executives,

Many marketers say they plan to increase their PPC budgets by at least 11 percent next year. For average search spenders, 33 percent plan to do so on Google AdWords; 23 percent plan to do so on other top-tier PPC engines (defined as Yahoo, MSN/Live Search, Ask.com and AOL); and 10 percent plan to boost their budgets on second-tier PPC networks (including Miva, Kanoodle, and Business.com).

Search is also seen as providing a strong return on investment by many marketers. More details on the Search Marketing Benchmark Survey can be found in today's SearchDay, "Search Budgets to See Double-Digit Growth."

Posted by Kevin Newcomb at 3:10 PM | Permalink

August 7, 2007

Online Advertising to Surpass Newspaper Advertising by 2011

The Financial Times reports that the 2007 annual research report on the media sector by media analysts Veronis Suhler Stevenson (VSS) forecasts online advertising will surpass newspaper advertising by 2011. With a projected annual growth rate of than 21 per cent per year, online advertising is expected to reach $62bn in 2011, making it bigger than newspaper advertising, which is expected to total $60bn in 2011.

The move to online advertising is not just a U.S. phenomenon. The shift in advertising spending away from traditional media to online and digital media is global. Some forecasters expect online spending in the UK and Sweden to overtake newspaper advertising as early as this year.

Posted by Amanda Watlington at 9:22 AM | Permalink

October 18, 2006

Google To Own 25% Of 2006 Online Ad Revenue

An eMarketer.com report estimates that Google will account for twenty-five percent of all online ad revenue. Google's share continues to increase (65% increase YoY) while Yahoo's growth continues to decrease, eMarketer says. Google first surpassed Yahoo in ad revenue back in 2005, but barely. Google in 2006 is expected to earn over $4 billion in ad revenue but Yahoo has just $2.9 billion according to eMarketer.com.

Posted by Barry Schwartz at 9:24 AM | Permalink

October 3, 2006

Cost-Per-Keyword Increases Slightly In Q2

MediaPost reports that keyword prices for the second quarter have pretty much remained flat from the previous quarter. The DoubleClick's Performics study showed a slight increase in the "cost-per-keyword" of 14 cents or about 0.5 percent. The number of clicks grew 32-percent year-over-year, with "active keywords" growing almost 50-percent.

Posted by Barry Schwartz at 8:26 AM | Permalink

September 27, 2006

2006 Online Ad Spend: 37% Increase in '06 & Search Remains Hot

The Internet Advertising Bureau (IAB) in conjunction with PricewaterhouseCoopers (PwC) released online ad revenue figures for the first two quarters of 2006, showing a 37% increase year-over-year for the same period. The first half of 2006, revenues from online ads were $7.9 billion. Search counted for approximately 40 percent of those figures, at $3,164 million. Like in the past, they do not break out contextual ads from search ads.

A ClickZ story says that in a separate report, by eMarketer reports all of this year will be worth 15.9 billion. In short, growth is still strong at 26.8 percent but down slightly from last year at 30.3 percent.

Posted by Barry Schwartz at 8:29 AM | Permalink

September 20, 2006

Again, The Need For Search Ad Revenue To Stand Alone

Has the search bubble popped, given Yahoo's warning yesterday about declining ad revenue? That warning generated a stock plunge that has hit both Yahoo and Google. No, it's probably not a search bubble. Instead, it's a lesson in the danger of not breaking out search ad revenue from other forms.

Exactly as Robert Scoble notes here, the ad slip at Yahoo is not necessarily a search ad problem. What Robert calls "banner ads" is more specifically display advertising, graphical ads that are not pay-per-click text ads that show up in response to a search. Yahoo has a much bigger display advertising effort than Google. The downturn could be impacting just that side of their ad house.

In fact, the Wall Street Journal article about Yahoo's warning suggests this may be the case:

Yahoo's total revenue last year was $5.3 billion and an unspecified, but significant percentage of that was from so-called branded advertising, which includes graphical display ads as opposed to the small text ads placed beside search results.

Analysts say the two sectors Yahoo singled out generally spend heavily on such display ads. John Aiken, head of equity research at research firm Majestic Research Corp. in New York, said data about Internet activity suggest that search advertising for Yahoo and the broader industry appeared to be growing around expected levels. "Branded [advertising] is going to be a bumpier road for growth than people expected," said Mr. Aiken.

Of course, Google's not necessarily immune. A significant amount of Google's income is from non-search advertising -- contextual ads, some of which are graphical in nature. This is one reason why I'd asked Eric Schmidt at SES last month about breaking out search ad income from other forms. From the transcript of our talk:

Danny: Somewhat related: my understanding is that I still can't go to Google's financials and know how much money is going into content ads versus search – and I care about the search. I mean, to me search is a different intention and contextual. And so when people say, "we're going to measure the health of the search market," I want to know how the health of the search market is from a leader like Google. But I've always felt like when those figures are mixed together, it pollutes the data. For all I know, your contextual network is suddenly tanking, a whole bubble is about to burst out there, but search will be healthy. But the whole search industry might go down with it.

Eric: None of that is going to happen.

Danny: None of that is happening. And I was going to say, alternatively, everything has been doing great.

Eric: Since we're on the record, since we're on the record and it's a public company, I want to make sure that what you just said [that the contextual network is "suddenly tanking"] is not true.

Danny: Right. But that's the opposite to what could be happening. But contextual might be doing wonderfully, and search might be [tanking] …

Eric: They're both doing well. Again, we have a whole bunch of people who are trying to reverse-engineer the economics of Google. And we have historically not wanted to give out the detailed information that you're describing. These are clickthrough rates, CPCs, RPMs, and so forth. There are a number of reasons [not to split these out]. One of course is competitive. But there's a more fundamental reason, which is that anybody who looks at how Google actually runs the ad network makes simplifying assumptions that are not in fact true. And it's important that we, Google, not give out information that can be misused or is essentially false. So we've chosen, to the frustration of many, to not reveal the underlying economics of the ad box. Partly because it's changing so quickly. And all of the estimates that you see are based on smart people making estimates without our assistance. We think for numerous reasons that's the right decision. It's how we run the business.

Perhaps now we'll see some change happen. The failure to do good breakouts, the pollution of other ad revenues mixed in with search, directly causes search to perhaps be seen as in trouble when it might be completely healthy.

In fact, as I told a reporter yesterday, I think search will be just fine given its history. Search was booming during the ad downturn of 1999-2001. It was booming because of its highly measurable, highly converting nature. Born from a downturn, I expect it will continue to ride out any future ones, if not benefit from them.

Posted by Danny Sullivan at 9:06 AM | Permalink

September 7, 2006

Borrell Bullish On Local Search Revenue Outlook

According to an article in today's MediaPost, Borrell Associates' newest local forecast is quite upbeat about geotargeted ad growth across categories, but especially in paid search.

Borrell predicts a 32% increase in local advertising online, to $7.7 billion by 2007. The firm also estimates local paid search will amount to $1.8 billion by next year. By 2010 geotargeted email and paid local search will together represent 50% of online local advertising. And the overall value of the local online ad market will approach $10 billion at the end of that forecast period, according to Borrell.

There's some additional analysis on my blog. We're waiting for a copy of the report and will follow up with additional posts after we get a chance to take a look.

Posted by Greg Sterling at 9:05 AM | Permalink

July 26, 2006

Online Ad Spend 9% Of All Ad Spend By 2011

ClickZ reports on a JupiterResearch report that online advertising spend is projected to snag up nine percent of the total advertising pie by 2011. They estimate that $25.9 billion in revenues will be spent on online ads by 2011, "rising at a compound annual growth rate (CAGR) of 11 percent over the next five years." For search marketers, 43 percent of the online ad spend will be search-based ads, accounting for $11.1 billion by 2011.

Posted by Barry Schwartz at 10:06 AM | Permalink

July 18, 2006

Keyword Prices Continue To Fall: Down 8.6 Percent

Fathom Online released a keyword price index update that shows keyword prices fell again quarter over quarter by 8.6 percent. Prices on average fell from $1.39 on March 31 to $1.27 on June 30. Last report also showed keyword prices dropping $1.43 at the end of 2005 to $1.39 in the first quarter of 2006, but folks blamed seasonality for the price drop. The reason for this drop? Marketers are bidding smarter says Matt McMahon, VP Marketing Services at Fathom.

Posted by Barry Schwartz at 12:25 PM | Permalink

June 14, 2006

Forecasted Online Ad Spend Is Corrected Upwards

Search is winning the hearts and minds of marketing managers across the US, (and this is good news for search worldwide). Brand managers that tend to buy display advertising more readily will continue to be a tough sell for search, but that may be its only limitation.

TNS Media Intelligence (which tracks online display advertising spend) has increased their forecast for 2006. This is a 4% correction from their earlier estimated growth, (and bucks the hold pattern or downward trend for other forms of advertising). The company cited earlier estimates as far too conservative after tracking faster than expected migration to the online space from traditional media. Online ad spend growth was 19.4% last first quarter, and is projected to continue to grow by 13% and reach a whopping 12% of total advertising spend in 2006. This figure is far higher than ever reported before.

Factoring search into the online advertising spend is what's responsible for this correction and several comments make this point clear. Search is not officially tracked by the company but was factored in using IAB numbers. Although I think it a generous figure, search is cited as adding an additional 50% to the tracked online spend and forecast for 2006. The health of online ad spending, (and search marketing especially), in the post-bubble online advertising era is unmistakable.

There are more quotes at Media Post.

Posted by Detlev Johnson at 9:43 AM | Permalink

June 7, 2006

Advertisers Increase Search Marketing Budgets

Loren Baker reports on a JupiterResearch study that shows both revenues earned from search marketing campaigns and budgets allocated to those campaigns have increased. Search marketers with annual revenues of $15 million or more have increased the share of the ad budget from 25 percent in 2005 to 37 percent in 2006. Plus 66 percent of marketers plan to increase search spend this year.

Posted by Barry Schwartz at 8:32 AM | Permalink

May 31, 2006

Record New Online Ad Spend

The latest figures from PricewaterhouseCoopers and the IAB shows another quarter of tremendous growth in online ad spending. By now it has reached just about double the spend during the year 2000 before the tumble. Inside the numbers, search is going to be a fraction of that total spend since media placement with banners, email and affiliate marketing also are represented in "online ad spend" figures. Online ad spending shifted since the year 2000, to a better portion of it ending up with search than ever before.

Tim Beyers of The Motley Fool helps us do the numbers with respect to Google and Yahoo!. Tim used the search engines' own revenue reporting assuming their revenue is entirely from online ad spending. He can show what fraction of the total online ad spend each engine has, finding Google captured 22% of US ad spending. He expected to calculate Google's share to be 40%.

Tim may not assume that online ad spending includes all online forms of advertising and not just search. He found Google's portion to be strikingly low. It's actually quite high considering the history of total online ad spending and search's share. What's more, he favorably compared Yahoo! with Google after calculating Yahoo! captured 16% of the spend. Yahoo!'s revenue includes earnings from other businesses, such as their Internet connectivity deal with SBC, and a myriad of other business offerings that would not be calculated into IAB's "online ad spend" figure. This makes Tim's characterization of Yahoo!'s share of the spend potentially too high against Google.

What Google has been able to do, is capture far more text-based search advertising dollars than anyone else. Google makes 99% of its revenue from text-based search ads, and most of that comes from ads served at its own properties. Google is vulnerable that way, but it is also driving search ad spending. The ratio for text-based search ads alone may be close to Google earning $4 for every $1 Yahoo! currently earns.

The final thing to point out about all this, is during the year 2000, the search ad spend was a minuscule portion of the total online ad spending at that time. If you see fantastic growth in Google's earnings, and increasing portions of the online ad spending that goes to search, it is because search growth has begun and continued to outpace media placement, email and affiliate spending. Search is the secret tactic become mainstream. Google exemplifies what is possible with search ads when advertising dollars meet the inquisitive, interested and engaged target audience and at just the right time.

Postscript: Tim wrote in to say the Yahoo! numbers he crunched came from his calculating Yahoo!'s revenue from "online advertising" after subtracting revenue from other businesses. No available further breakdown means the numbers are likely to include Yahoo! revenue from banner and other image-ad media as well as strictly search. From an investor standpoint, this makes sense (to compare apples to apples). A one-to-one revenue comparison with respect to our search industry, however, is not exactly possible here. Yahoo! appears too competitive against Google's search ad dominance.

To clarify (and reference) some other things about Google's revenue source, 99% of Google's income is "advertising related," and this means primarily text-based search ads. As much as 90% of Google's revenue is from the AdWords program because the majority of AdSense revenue is given to the publishers that host the ads. Google is experimenting with other media formats, but has encountered real trouble making anything else work. Google has not discovered the formula for making anything else work. Even though they are getting into video and radio advertising (as well as offline print), the format that is responsible for bringing in the revenue at this time is text-based search ads.

Contextual ads make up the remaining roughly 10% ad revenue after AdWords. AdSense is contextual advertising, and technically speaking, they may not be search ads per se, but the Google crawler uses its search prowess to match ads to the site nonetheless. The format that works best with contextual is also text-based, (although Google is pushing other formats on publishers and advertisers). They want to experiment, gather data and uncover another winning formula. I've heard from big brands I work with that Google is anxiously pitching them alternatives (I've heard with radio especially). I'd guess from my own anecdotal evidence that they want the recent purchase of dMarc Publishing to start paying off.

Posted by Detlev Johnson at 5:37 PM | Permalink

May 25, 2006

Search Marketing Growing Rapidly in the U.K.

A new report from industry analyst firm E-consultancy finds that search marketing revenues grew more than 65% in the U.K last year, and that same level of growth is on track for 2006. The report also offers interesting insights into the division of revenues between PPC and organic SEO, as well as insights into how much search marketers are charging for their services. More details on the report in today's SearchDay article, U.K. Search Marketing Environment Thriving.

Posted by Chris Sherman at 12:25 PM | Permalink

May 11, 2006

Online Ad Spending Continues to Grow

During the Dot Com Boom, many companies planned their online revenue models around free services supported by advertising, and for many, this model didn't pan out because many traditional ad agencies - and their big brand, big spend clients - did not embrace the online advertising opportunities available at the time. However, a new article from CNET reports on the current status of online advertising, including how it has cycled back to a point where many new services are expected to be supported through online advertising and where big brands are a major part of the expected growth of online ad revenue.

Other points in the article include that online advertising growth is expected to continue, with online ad spend increasing 24.4% this year. By 2010, US online ad spending is expected to grow to $23.5 billion while worldwide online ad spend will grow to $55+ billion. And search advertising continues to play a major role, currently 40% of the US online ad spend. By 2010, search advertising is expected to be worth $7.5 billion, up from $4.2 billion in 2005.

The article can be viewed here.

Postscript: The Wall Street Journal has an article today about big brands advertising online in Brand Marketers Return to the Web, Driving New Growth in Display Ads

Posted by Jennifer Slegg at 6:50 AM | Permalink

March 29, 2006

Search Advertising Spend Grows 79% In UK

ClickZ reports that search advertising spend grew 79 percent to £768 million ($1.3 billion) during 2005. Total online advertising spend grew 66 percent to £1.4 billion (about $2.4 billion), including display advertising and classified advertising. The article shows that U.S. based companies are more willing to move ad dollars from the marketing budget towards online advertising, as compared to companies in the U.K. It is also important to note, that the study, for the first time, used "actual results from Google's U.K." In the past years, they estimated spend, and have "low-balled" those figures in the past.

Posted by Barry Schwartz at 12:46 PM | Permalink

March 10, 2006

Will Local Search Engines Replace National Search Engines for Local Search?

ClickZ reports "about half the panelists believe local search engines will replace national search engines like Yahoo, Google and MSN when it comes to specific market needs," according to Borrell Associates's "2006 Local Search Advertising" report.

Two-thirds of the panelists say that this can happen as soon as five-years from now. My own personal feeling is that this won't happen. Yahoo, Google and the other engines, in my opinion, are doing a wonderful job with their local search portals, and the vertical integration with their main search portals. In addition, Google and MSN have wonderful search advertising targeting, with Yahoo not lagging that far behind. But with local search revenue to hit $987 million this year and double the year after, there is plenty of money to be shared amongst all the engines.

An executive summary of the report is available here.

Posted by Barry Schwartz at 9:08 AM | Permalink

March 3, 2006

Search Hypergrowth Over; But Search Growth Continues

Rebecca Lieb from ClickZ has wrote an excellent article named Is Search Shrinking? In her article she discusses some of the recent concern over Google's CFO, George Reyes statement, "Clearly our growth rates are slowing."

Rebecca explains that search as an industry is "maturing" and that we are "moving out of a period of hypergrowth." But the industry is not dead, far from it she says. We have contextual ads, local search market, all the social network applications and much more that is still in its infancy. Search ad growth may be not growing at the exponential numbers like it once was, but it will continue to grow.

Posted by Barry Schwartz at 9:32 AM | Permalink

February 16, 2006

PPC Ad Impressions Grow 16% in 6 Months

A new Nielsen//NetRatings study shows that "sponsored link advertising impressions" grew from 55.4 billion to 64.3 billion or 16 percent during the past six months (August 2005 and January 2006). Google in August 2005 earned 36.2 billion, which increased to 41.1 billion in January 2006, a six-month increase of 14%. Yahoo percentage growth was larger than Google's, accounting for 19.2 billion in August of 2005 with an increase to 23.2 billion in January 2006 or a 21% increase in the past six-months. These figures include all of Google's and Yahoo's search partners and contextual networks. For the full release download the pdf.

Posted by Barry Schwartz at 5:11 PM | Permalink

Local Search to Grow from $3B to $13B by 2010

ClickZ reports that Local Search to Hit $13B by 2010. Online local search, including Internet Yellow Pages, local search and wireless, brought in $3.4 billion this past year. According to a forecast by the Kelsey Group, by 2010, it should reach "nearly $13 billion." The Yellow Page advertising is expected to only grow 1.5% over the same time period, reaching $28.4 billion by 2010. More details at ClickZ.

Posted by Barry Schwartz at 8:54 AM | Permalink

February 1, 2006

Marketers Find Google Ads Slightly More Effective Than Yahoo & Well Above MSN

Survey: Advertisers Say Search Ads On Google Better Than Yahoo, MSN from MediaPost reports on an Outsell survey of 1,200 advertisers last November that found 71 percent found search ads on Google were effective, compared to 62 percent on Yahoo and 49 percent on MSN. But those most likely to find Google as "extremely" effective had slightly smaller average budgets than Yahoo and MSN spenders.

Posted by Danny Sullivan at 10:55 AM | Permalink

January 17, 2006

Search Spend Was Up Last Quarter

New online spending stats from a Deutsche Bank survey of 60 media executives found that last quarter (Oct-Dec. 2005), 65 percent said paid search spending increased compared to the third quarter. Google got 57 percent of spending, with Yahoo 23 percent, followed by MSN at 5 percent. Average cost per click was estimated at 58 cents, though the report added a caveat that it was difficult to guage this price accurately for various reasons. More details from Online Ad Spending Surpasses Expectations at MediaPost.

Posted by Danny Sullivan at 9:25 AM | Permalink

January 9, 2006

SEMPO Survey Sheds Light on Search Marketing Industry

SEMPO has released its annual State of the Search Marketing Industry report, which looks at the activities and budgets of search marketers during 2005, and offers perspective on where the industry is likely going in the near term. I've got a rundown of the report in today's SearchDay article, The State of Search Engine Marketing.

Posted by Chris Sherman at 8:00 AM | Permalink

October 4, 2005

SEO Big With Small & Medium Sized Businesses

No Guesswork Here: Web Sites Work For SMBs at InternetNews.com has a few search stat tidbits worth noting. A survey has found that among ways small and medium-sized business promote their sites, SEO is ranked second, 54 percent, just after email at 60 percent. That's SEO as in non-paid search. Paid search (or PPC) was ranked fourth at 20 percent.

Posted by Danny Sullivan at 8:25 AM | Permalink

September 26, 2005

IAB Report: Search Ads Account for 40% of Ad Sales During First Half of 2005

Via a thread in the Search Engine Watch Forums, news from the Interactive Advertising Bureau and PriceWaterHouseCoopers about online ad spending in the first half of 2005.

From a ZDNet article: As of June, advertisers had spent $5.8 billion to place ads online this year, a 26 percent increase compared with the first six months of 2004, according to a new report...Overall, search ads accounted for 40 percent of Internet ad sales, in line with last year, the group said. Banner ads and classified listings were the next-biggest ad categories, attracting 20 percent and 18 percent of the spending, respectively.

This IAB news release offers a bit more. The complete report will be available via the IAB web site next week.

Last year, Danny noted that contextual advertising, which he doesn't conisder search advertising, was included in the search ad total. I can't spot anything in today's news release that shows that this fact is any different this time around.

It's very likely that Danny will post some analysis of these numbers in a future blog entry but I thought they were worth getting out asap.

Want to discuss? Check out this thread in our Search Engine Watch forums.

Posted by Gary Price at 4:37 PM | Permalink

September 24, 2005

Search Marketing Spend Increasing at a Healthy Clip

A new survey from Marketing Sherpa reports on current and projected spend for search engine optimization and paid search campaigns.

MarketingSherpa cites Merrill Lynch data that the U.S. total SEO spending rose 177 percent over the last 12 months. The study projects the growth will continue, but at a slower pace. Pay-per-click campaigns lifted from 34 percent of marketers reporting results to be "very good" in 2004 to 43 percent now calling their campaigns "very effective." Search engine optimization (SEO) campaigns only climbed two points, from a 31 percent success rating to 33 percent. Both strategies fared better than e-mail marketing, which reported a 25 percent "very effective" campaign rate, and affiliate marketing, which garnered 22 percent effectiveness.

Enid Burns has more details on the survey in SEM Sees Optimization PPC.

Posted by Chris Sherman at 1:03 PM | Permalink

June 22, 2005

Pay Per Call May Rise To $4 Billion In 2009

Kelsey Group: Consumers, Click Fraud Will 'Compel' Pay-Per-Call Adoption from MediaPost looks at a new Kelsey Group report projecting that pay-per-call revenues may grow to between $1.4 and $4 billion in the US by 2009. Currently, they amount for a "negligible" amount of paid search spending. The report also speculates that if click fraud concerns grow, some advertisers might consider pay-per-call as an alternative. Of course, online merchants might more likely look to doing something like revenue sharing or cost-per-acquisition deals. More about the report directly from Kelsey here.

Posted by Danny Sullivan at 8:49 AM | Permalink

June 6, 2005

US Search Players Moving More Into China

U.S. Web Giants Target China from BusinessWeek is a general overview with lots of stats on US search players moving further into the China market.

Posted by Danny Sullivan at 1:49 PM | Permalink

June 1, 2005

Yahoo and Google Rewrite the Information Industry Playbook, Divert Ad Revenues from Newspapers

Information industry consulting firm Outsell has published a new study about how Google and Yahoo have "rewritten the information industry playbook."

Outsell wrote that Google and Yahoo! are "clearly diverting advertising revenue" directly from the newspapers and magazines owned by the 10 largest information companies. In fact, Outsell found that the newspapers owned by the New York Times Co. are struggling as the industry in general tries to "recapture ad revenue growth and young audiences."

More info in the Media Post story: Report: Google, Yahoo! Taking Ads From Newspapers.

Posted by Gary Price at 12:42 PM | Permalink

May 25, 2005

Search Spend Doubles, Sends Online Retailers 43 Percent Of Their Traffic

A new Forrester/Shop.org report finds that online retailers more than doubled their search ads spend from 2003 to 2004. Of 136 retailers surveyed, they spent $877,630 on search ads in 2004, over double the $399,923 spent in 2003. Retailers also reported that search traffic made up a giant 43 percent of traffic to their web sites. More details in this press release on the study and some charts in this ClickZ article: Online Retail Growth Robust.

Posted by Danny Sullivan at 10:36 AM | Permalink

May 3, 2005

Forrester: Search Engine Marketing Will Grow 33% in 2005

Forrester Research has just released a new forecast: Online Marketing Forecast 2005-2010, access to the full text report is fee-based but this news release provides a few highlights:

+ Search engine marketing will grow by 33 percent in 2005, reaching $11.6 billion by 2010. Display advertising, which includes traditional banners and sponsorships, will grow at the average rate of 11 percent over the next five years to $8 billion by 2010.

+ Total US online advertising and marketing spending will reach $14.7 billion in 2005, a 23 percent increase over 2004.

+ Sixty-four percent of respondents are interested in advertising on blogs, 57 percent through RSS and 52 percent on mobile devices, including phones and PDAs.

+ While marketers surveyed believe that online advertising channels, such as search engine marketing, online display ads, and email marketing will continue to become more effective relative to traditional channels, barriers that include a lack of online advertising standards and hands-on experience have kept marketers from fully embracing online channels.

Posted by Gary Price at 10:39 AM | Permalink

April 29, 2005

2004 Online Ad Spend: Search Is Hot, But Contextual Pollution Of Figures Continues

As Gary mentioned earlier, online ad spending figures for all of 2004 were recently released by the IAB. What do they show specifically for search? Up, up, up, no matter how you want to slice it, though mixing in spending on contextual ads doesn't give a completely clear figure.

Search & Contextual Is Top Category, Again: For another year, search (which includes contextual ads, according to the study) had a far bigger slice of ad spend than any other category, gaining a 40 percent share of all revenue. Display ads were a distant second at 19 percent, though if you buy into the "All Display Advertising" super-category the IAB also provides, then it rises to 39 percent of all spend.
Search & Contextual Worth Nearly $4 Billion: In terms of actual revenue, search was estimated to have earned $3.85 billion in ad spending.
Search & Contextual Had Biggest Spending Rise: Search revenues rose more in dollar amounts than any other category, climbing by $1.3 billion from $2.54 billion in 2003 to the aforementioned $3.85 billion in 2004. That's a 51 percent rise.
Search & Contexual Still Below Other Offline Spending: Despite being worth $4 billion, the report shows that search spending is still well below many other types of media spending. Direct mail tops the list, being worth $50 billion, followed by newspapers at $46 billion and broadcast TV at $33.5 billion. The list ends with outdoor advertising at $6 billion. But with more growth, search may push ahead.

The IAB Internet Advertising Revenue Report is available (PDF format) to anyone and has plenty of charts and details. Another nice chart is over in the press release about the report. I used those figures to sort the data differently and put search in better perspective, which you'll in the version of this post for Search Engine Watch members.

That extended post also looks in depth at the giant flaw with report, the failure to break out contextual ads from search. They aren't the same as search, as I explain -- and counting them as search pollutes the data.

I also look at how the recent Google CPM pricing for contextual ads is finally generating more awareness that contextual isn't search, as well as what I've long written, that Google and Yahoo aren't tech companies, aren't search companies but are ad or media companies.

Posted by Danny Sullivan at 9:40 AM | Permalink

April 28, 2005

Report: Online Ad Revenues at Highest Levels Ever

I'm sure Danny will have more to say later but I thought I would point out that the Interactive Advertising Bureau/PricewaterhouseCoopers Internet Advertising Revenue Report with 2004 revenues was released today. Zachary Rodgers takes a look in this Clickz article.

He writes:

Search marketers continued their stampede. Annual revenue in this category leapt from 35 to 40 percent of the overall spend. On a dollar basis, search revenues were up more than half to $3.9 billion.

This press releases from the IAB has much more along with a few tables that break the numbers out by: + Ad Format + Ad Categories + Pricing Model

Want more? No problem. The full text of the report is available here. It's loaded with charts and tables.

Posted by Gary Price at 6:03 PM | Permalink

April 26, 2005

Like Search Engines, Search Marketing Firms Growing Revenue

Fathom that: Ask Jeeves veteran gets successful search result from the San Francisco Business Times profiles search firm Fathom Online and worth a read for those who need a refresher on how search marketing companies are growing as investment and acquisition targets.

San Francisco-based Fathom earned $20 million in revenue last year and expects to double that to $40 million this year (though a large chunk of that may go right back out to the search engines themselves).

The company, only three years old, employs 50 people and expects to reach 100 by the end of the year. It has a single outside investor that's contributed $6 million, so far. But Fathom CEO Chris Churchill -- a former Ask Jeeves exec -- says there are no plans to go public or sell in the near future.

Meanwhile over in Texas, Range Online founders Cheryle Pingel and Misty Locke were recently named in Fast Company's new list of Top 25 Women Business Builders. Like Fathom, Range pulled in over $20 million in revenue last year.

Cast your mind back to January, and you may recall Efficient Frontier had announced (link to PDF press release) they were managing over $100 million in annual paid search marketing spend. What really caught my eye about that, aside from the double zeros behind the one, was the claim they handled more than any other search marketing firm.

I didn't necessarily doubt that they were handling more revenue than anyone else, but how could they prove that? They company's PR firm emailed back:

To answer your questions -- there are no pure-play public search engine marketing firms so there is no public information on fees, spend under management, number of advertisers - so we need to use our data to understand the market.

We were able to compile a list of the top 400 paid search advertisers by using our proprietary technology and our knowledge from the sales cycle. We download the bid landscape each day for all of our keywords (over 7.5 million in 2004 alone) and we run models and estimates to determine how our customers should buy in the space. We also run competitive analysis to figure out what their competitors are spending in the marketplace.

This gives us enough data from our every day activities to identify the top spenders. In addition, our sales team talks to the top 1000 advertisers all day long, so we know what people are spending based on actual conversations. Based on our top 400 spenders list, we were able to confirm that we manage more than any competitors.

That $100 million, by the way, is purely the in-and-out money. In other words, it's what's managed on behalf of Efficient's clients, not what the company itself keeps. So total revenues generated are higher, though what's actually retained by Efficient (as with the other companies above) is less.

By the way, bringing things back to Fathom, that company and Efficient recently teamed up (PDF release) to share services.

Posted by Danny Sullivan at 2:11 PM | Permalink

April 19, 2005

Past 10 Years Of Online Advertising History Available.

The Decade in Online Advertising 1994-2004 is a new 21 page PDF report from DoubleClick that offers a ton of data about online ad spend over the past 10 years. Check out the nice quarterly spend chart on page 4. Page 12 has a nice pie chart showing search at having 40 percent of online spend as of the second quarter of last year. A short history of search ads begins on page 11.

Posted by Danny Sullivan at 11:39 AM | Permalink

April 10, 2005

China's Search Market Rises 81% in 2004

A brief article in the People's Daily reports on the release of a report about China's search market.

The report released at a meeting on the development of China's search engine industry held in Xiamen City, showed that the market of the online service hit 1.25 billion yuan (151 million US dollars) in 2004, rising 81 percent from the previous year.

The report also predicted that the market of online searching engine in China would reach 2.3 billion yuan (278 million US dollars) this year, and might rocket to 5.62 billion yuan (680 million US dollars) by 2007.

Posted by Gary Price at 12:59 PM | Permalink

April 6, 2005

Online & Search Spending Rose In First Quarter 2005

Internet Ad Spending Up In First Quarter from MediaPost reports of a new study finding online ad spend continued to grow in the first quarter of this year. Based on questioning 108 media executives, most spend is going to display ads -- 57 percent, while search gets 20 percent. Overall spending was estimated to be up 11 percent from the previous quarter. At the end of the story are more search specific stats, including that 69 percent reported paying more for search in this latest quarter. Google gets 53 percent of search spend; Overture gets 28 percent.

The vast majority of respondents--69 percent--also reported spending more to buy sponsored listings on search engines. Thirty-five percent of executives said cost-per-click had increased between 1 and 10 percent, while 25 percent reported a price increase of 11 to 20 percent; 9 percent of respondents said paid search was now at least 21 percent more expensive than in the last quarter of 2004. FindWhat and MSN are also named with 4 percent of spend each.

A separate brief story from MediaPost also covers that media planners expect to pay more in the second quarter of this year.

Posted by Danny Sullivan at 9:24 AM | Permalink

April 5, 2005

Online Spend Beats Radio In The UK

My wife used to be in radio promotions with the solid job when I went into that fly-by-night internet stuff. Well, love, online advertising in the UK just nudged out spend on radio, 3.9 percent for online versus 3.8 for radio in 2004. Figures are promised in the next few weeks to breakdown online spend by category. Expect search likely to be a significant chunk. Won't it be interesting (perhaps inevitable) if in a few years, search itself manages to outspend radio? More details from ClickZ: U.K. Online Ad Spend Edges Out Radio.

Posted by Danny Sullivan at 6:14 PM | Permalink

March 21, 2005

Euro Search Marketing To Grow 65 Percent

Forrester Research estimates that search marketing will increase 65 percent in 2005 to 1.4 billion. That spend includes non-search contextual ads, however. From its new report, the UK is found to be Europe's biggest online ad marketing, followed by Germany. France is said to have shown surprising growth. If you're a Forrester client, the "Europe's Search Engine Marketing Forecast, 2004 To 2010" report is here. If not, then European Search Engine Marketing To Grow 65 percent in 2005, Says Forrester Research from Tekrati has a summary.

Posted by Danny Sullivan at 1:52 PM | Permalink

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