Search Ads Power Ahead in US Online Market

05 September 2008

NEW YORK: Latest figures from web analytics firm eMarketer reveal that the US search advertising market is galloping ahead, whipped-on by the unstoppable Google, while the display ad sector trots behind.

The entire web ad market continues to buck the general trend towards contraction. In fact eMarketer's numbers show 20% growth in the second quarter.

But display is not reaping these rewards, much to the chagrin of Yahoo and Microsoft, which pinned the colors to their masts in the heady, early days only to find the promised revival slow to materialise.

Despite the eye-watering investment to adorn display advertising with the latest bells and whistles, says Emarketer, spend in the market is likely to top around $5.2 billion (€3.5bn; £2.9bn), around half the expected $10.4bn on search ads.

And the reason? Customers are tightening their marketing budgets and firmly believe the latter offers a better RoI.

Comments Jody Farmer, vp of strategic marketing for the portal: "We have to be a little more thoughtful about how we spend our money."

Such attitudes are set to propel Google even further ahead of its rivals. Search ads are likely to account for 42% of overall US online adspend in 2008, says eMarketer, up from 40% in 2007. Display is expected to remain at around 21% of total spend.

However, even search could take a hit as the economy continues on its uncertain path.

John Aiken, MD of Majestic Research, says some smaller businesses are buying fewer keywords, although big players are maintaining their spend.

Data sourced from Wall Street Journal Online; additional content by WARC staff