Google predicts seismic ad shift

14 February 2013

NEW YORK: More than half of advertising could be online within five years, claims Google's chief business officer.

Speaking at the D: Dive Into Media conference, Nikesh Arora observed that while the global advertising industry is worth around $800bn, online advertising accounts for less than $100bn of that figure.

"There is a reasonable probability that over 50% of advertising goes online in the next five years," he said.

"The big tipping point we're waiting for is internet-connected televisions," he added. "We're waiting for things going from 'nice-to-have' to 'must-have.'"

Elsewhere, a new report suggests Google could generate $5bn in revenue this year via the sale of advertisements on its search engine on tablets.

The company has already increased the prices that advertisers pay for ads on mobile-devices, bringing them up to the level of ads on PCs saying that "the lines between devices are quickly blurring" while ad performance is similar.

Marin Software, however, expects conversion rates from searches on tablets to exceed those on PC during the course of this year and says that advertisers are already spending more of their ad budgets on tablets than on smartphones.

"Either tablets have overperformed or smartphones have underperformed," observed Matt Lawson, Marin's chief marketing officer.

By the end of 2013, tablets are forecast to account for 20% of mouse clicks on Google's search ads in the US, as more people use them to research and shop online.

Google generated about $40bn in total ad revenue in 2012. 

Data sourced from AllThingsD/Wall Street Journal; additional content by Warc staff