SEO News
ryan-kevin

How Search Will Save Online Advertising... Again!

by , Comments

I remember the day online advertising died. I was singing, “bye bye miss free party, free booze pie.” The period between 1997 and 2000 was a great time for the online universe. The youthful exuberance was the closest anyone in my generation will ever come to feeling the unabashed freedom of the hippie generation.

Once again, the online advertising world is under siege. The financial services industry is facing something of a dilemma. Housing prices are dropping. Mortgage rates are on the rise. The sub-prime lending category is in crisis.

According to recent data released by Oppenheimer and Company, the financial services category represents 16 percent of online spending. How much of that is search? As the situation worsens, what will happen to search engine advertising spending? Before you prepare yourself for a series of new millennium pink slip parties, let’s take a closer look the situation.

Torturing the Data

The September 3rd, 2007 report from Oppenheimer pulled together some data from the IAB and AdAge to estimate total search spending in the financial services category as a percentage of total ad spending. In 2006, advertisers poured an estimated 1.2 billion dollars into paid search.

Advertisers in the financial services category dropped an estimated 2.7 billion on Internet advertising in 2006. Oppenheimer estimated 46 percent of ad dollars went to paid or sponsored search listings with the remaining portion to display and other formats.

Google should probably be worried since the largest portion of its revenue comes from paid search listings, shouldn’t it? Not really, Oppenheimer estimates Google’s exposure (mortgage related advertising) at only 3 percent of 2006 revenues. While the ad business fallout will extend to other search providers like Yahoo! and MSN as well, there are plenty of reasons to be optimistic about search.

Search Saves All

I am of the opinion that ad buyers will decide there is a bit more to online ads than the sub-prime lending category. If the fallout hits online ad buyers, won’t that open the door for new advertisers previously shut out of the category? In other words, short-term loss will lead to long-term gain.

Probably, but I’ll get to that in a minute. In the history of recession, depression, and overall lags in the ad business, which type of advertising usually benefits? Direct response and highly targeted formats, of course.

One would need a pretty short memory to have forgotten the amazing growth spurt search engine advertising saw the last time online advertising suffered a near-death blow. Our worlds changed, and from 2002-2004, search went from a rounding error to a multi-billion dollar industry.

Even with the potential for drastic cutbacks in the financial services category, advertisers sitting on the fence or holding off from expanding into new areas will enter the online fray in bolder, more aggressive ways. In other words, one industry’s loss is every other industry’s gain.

Fallout for “Other” Ad Formats

Since 40 percent of the top 50 Internet advertisers' spending lives in the financial services category, does that mean the Internet ad inventory crisis is over? Sure it does; if top advertisers cut their budgets, it will be easier to secure premium ad inventory.

Easier, yes, but it’s not going to look like the dark days of Internet advertising early on in the new millennium. Rich targeted formats will grow and flourish and mature when the financial category effectively “pulls out” of the top slots in Internet ad spending.

Search will see some of the benefits, but categories that have emerged in the last few years will see the biggest gains. Behavioral targeting and related technologies (the unobtrusive ones, anyway) will see large gains in the face of the potential slowdown. Perhaps the large-scale convergence of search and behavioral targeting will shift into high gear.

Survival of the Fittest

Here’s what’s going to happen. Only the financial advertisers have been living like it's 1999. For the lending industry, it has been 1999 with low rates and a sub-prime market that’s been craving cash. Financial advertisers will have to re-think and re-engineer online ad campaigns and targeting.

While lenders re-evaluate revenue sources, everyone is worried about who will make it through the mess and who won’t. There will be some casualties. Portals focusing on lending to the sub-prime category will be the first to go. Unfortunately for everyone involved, those portals have been spending big bucks in the online advertising universe.

And now, a moment of silence for that company eager to help lower my bills. What was that company’s name again?

Remember my running mantra? Don’t panic. The free ride is definitely over... again. Lenders will stop giving money to borrowers they shouldn’t have been lending money to in the first place. My money is on search for the short term, while the ad industry balances itself out and the category begins yet another targeted expansion.


ClickZ Live Toronto Twitter Canada MD Kirstine Stewart to Keynote Toronto
ClickZ Live Toronto (May 14-16) is a new event addressing the rapidly changing landscape that digital marketers face. The agenda focuses on customer engagement and attaining maximum ROI through online marketing efforts across paid, owned & earned media. Register now and save!

Recommend this story

comments powered by Disqus