Some Retailers Balk At Search Ads As Prices Soar from Dow Jones discusses how as search ad prices rise, some retailers are no longer finding they can keep up. Of course, using eBay as a prime example of this actually isn't convincing. As a "middleman," eBay's naturally going to find it hard to get the same return as a merchant who sells direct and wishes to bid against them for the same term.
With respect to my JupiterResearch colleague Niki Scevak cited in the story, the idea that rich media or banner ads are nearing the same ROI as paid search is simply not believable. It's not a fact I've not heard from any of the advertisers I've talked with nor written of widely anywhere. Honestly, I'm just left wondering if that fact wasn't sourced right or understood correctly for this story.
Anyway, the financial/investor types are all freaked that the prices mean that search engines will be in trouble if advertisers drop out. Hey, it's limited inventory. It's like saying that TV is in trouble because people want to pay more for the limited ads they have. They aren't. Higher prices means demand, not a lack of it.
Also note that at the end of the story that those prices are expected to rise, improving conversions is one way advertisers are expecting to stay in the market (another way is a turn back to organic/free/natural search). See also the past blog post Most Conversions Happen Offline; You Need To Measure These!, to understand how current ROI measurements may only scratch the surface of measuring true conversion.
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