Posted September 4, 2008 4:38 pm by with 14 comments

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As noted by Andy Beal earlier today there appears to be some unnecessary alarmism regarding the current state on online ad spends. I say unnecessary because as we have noted on another occasion the media really has a twisted sense of when the sky is falling. According to the Wall Street Journal today there is actually cause for celebration from the 2nd quarter numbers for Internet advertising rose 20%. So what’s your take? Should we panic and go back to smoke signals or just struggle through a sluggish 20% growth cycle?

I can’t take this anymore! What I liked most about the WSJ take on this news was where advertisers were focusing their spend. This was actually valuable because it appears that while we fly ahead towards Web x.0 (insert your favorite version) people who like to advertise to other people who like to buy their products are spending more on – GASP! – text ads in search engines. It’s on track for $10.4 billion this year. This is double what will be spent on display ads and the gap is widening.

As an example take which is referred to as typical. They spent $30 million on online marketing last year. By the way, since I usually work with the SMB (small medium business) market a $30 million spend is not typical at all but I digress. Some of that budget last year was used to experiment with buying display ads and now this year that experiment will be halted and those dollars redirected to – you guessed it – search ads. Apparently the ROI on the display ads didn’t cut it.

With more than 70% of the US search-ad market, Google is smiling bigger than ever. This news comes on the tail of their Chrome browser beta this week. World domination is just around the corner apparently. The article continues with a lot of spin from the likes of Yahoo!, AOL and Microsoft to say that display advertising is not suffering like it seems because (insert lame PR excuse here).

The part that was distressing to me going back to point earlier about the small business search marketer is that there is an apparent cutting back in this segment around number of keywords being purchased. I personally just see that as small business folks not wanting to waste money on poorly converting terms while letting the big boys spend as freely as ever. One man’s opinion. John Aiken of Majestic Research notes that more ads are showing up for some keywords and suggests that Google is “potentially stretching for dollars”. Google’s response was that in many cases it just has more ads to show because of the volume.

It’s up to us as internet marketers to cut through this stuff and do the next right thing. Just continue doing search marketing because it works. What a novel idea, huh?

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  • I bet Google’s smiling – adsense click costs seem to be getting smaller and smaller for me while there are more clicks received

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  • The reason of more ads to show because of the volume is not quite proffesional explanation, isn’t it?

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  • Ashley,

    I suspect that there was a bit more to that answer but all that the Journal “shared” was that tidbit. Makes you wonder if they were trying to make Google look a certain way. Google’s success certainly opens them up for that kind of “treatment”. Having said all of that I doubt anyone at Google lost any sleep over it either!

    Thanks, Ashley.

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  • Anche in Italia gli investimenti in Pubblicità sono aumentati non di poco negli ultimi mesi.. il problema è che la gente non ha soldi da spendere! Che paradigma…

  • $30 million in online marketing? wow! i know a lot of big domains/sites that have a problem with even a few thousand dollars.

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  • PS3

    To what extent does Google increase the cost per click if volume declines?

  • Jeffrey Pipes Guice

    I’m interested in reaching social network websites who are interested in trading equity for a $10,000,000 media campaign.

  • I think the figure will go on increasing only……coz there will e further increase in internet users.

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  • I agree with your comment seoforums, not only that, but people, and companies are starting to realise that they have to pay to be seen.

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  • Frank, Thanks for the great post. Yes, Google is laughing themselves to the bank and will be for a while. I am an Adwords coach and consultant and see everyday how much of a stronghold Google has on the search engine marketing world.

    Get a piece of the action and beat the Adwords System. Contact

  • I used adwords and noticed the the price per click varied massively, sometimes being charged £2 per click on a certain keyword.

    It’s too expensive for a single person to afford to keep up.

  • If you are a business then the cost to run this is manageble compared to if you are an individual.