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Report Says Search Needs More Inventory

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Anecdotally, it's long been said by advertisers that they can't get as much search traffic as they'd like. A new report from Nielsen/NetRatings backs this up -- and suggests that the lack of supply may drive prices so far up that it slows the growth of search advertising.

Solution? Increase inventory. Of course, what you consider "growth" is also an issue. If it's measured by rising revenues, then the short supply may mean growth will increase. And given that given that advertisers still feel search is very cost effective, according to even this report, I'd expect price rises to be inevitable in the short term.

The report also charts that there were 1.2 billion search sessions in May 2004, up 30 percent from the same time last year. Half of this was said to be from an increase in the online audience overall. It's assumed that type of audience growth will slow, so another alarm bell is rung that search needs to find new ways to grow.

Still, 11 percent of the remaining growth has come from the existing audience apparently doing more searching. Overall, I come away with the impression the search companies are doing a pretty good job of growing the frequency of search.

For more comments from search companies and advertises, the New York Times has a nice article on the topic.

It's important to note that the figure cited is for search "sessions," not actual searches. A session is defined as anytime someone goes online and conducts at least one search anywhere. So if you went online and did two searches, one at MSN and one at Google, that still counts as only one single session.

Does this result in undercounting? Perhaps. Let's say you change the metric so that a visit to a different search engine count as a separate session, making the example above into two sessions. NetRatings says in this case, the rise is minor -- 1.3 billion search sessions in May 2004, rather than 1.2 billion. They say this suggests that most sessions take place at only one search engine.

But what about actual searches? Say you go to Google and do three different searches. Potentially, you see a different ad each time. But since NetRatings counts this as only one single session, the "inventory" is reduced.

Want to comment or discuss this story? Come join in at our forums in this thread: A Drop in Search Engine Ad Supply.


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