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Are You In The Know? Display Spending Begins to Catch Up with Search

December 8th, 2010

Growth in spending on online display ads will outstrip that for paid search through 2014, eMarketer forecasts, though search will continue to take the greater share of dollars.

In 2010, both search and display will see increases greater than the rise in total US online ad spending, estimated by eMarketer at 13.9%. But between 2011 and 2014, eMarketer projects online display spending will grow faster than overall online spending, while search spending will lag slightly behind.

The increase in display advertising will be driven partly by the dramatic rise predicted in online video advertising, set to grow by at least 34% every year through 2014. Banner ads will experience more moderate gains of between 7% and 16.2% annually, while rich media spending will stagnate.

In 2010, eMarketer estimates US advertisers will spend $12.37 billion on paid search, compared with $8.88 billion on online display ads. Search will still get the most dollars in 2014, at $18.84 billion, but display will have closed the gap somewhat and reach $15.92 billion in spending that year.

“The growth of display doesn’t necessarily mean that advertisers are spending less on search,” said David Hallerman, eMarketer principal analyst. “Much of the display ad spending gains are new dollars coming online—which is part of a bigger trend towards more spending on branding, rather than spending focused on direct response alone.”

Display ads like static banners have a bad reputation for low clickthrough rates but still serve an important branding purpose. “Banner ads today mainly have subliminal effects on the audience,” said Hallerman. “That makes banners difficult to measure directly. However, the uptick in search results due to banners from the same advertiser is a long-standing pattern seen by sophisticated digital marketers.”

Source:  eMarketer

My Two Cents

I agree that much of the display ad spending gains are new dollars coming online but you must also note that display advertising also carries a higher price tag than search advertising.  Especially video or rich media advertising.

With rich media you also have to pay a third party to serve the ads which increases your overall cost.  Not to mention additional costs incurred on the production side of it. I am a firm believer in running parallel display and search campaigns to maximize your overall web exposure to convert a higher ROI.

One Comment

  1. Adrian Blake says:

    Absolutely agree.

    As online video advertising finds the right form (a big hurdle), it will absolutely grow off its small base. And serving costs will presumably decline. But production costs certainly are not going away. Just like with TV, video = big fixed production costs. (That is, if you want it to look slick. And it has to go viral, too.) Cheap and cheerful video might work for local TV in small markets, but nobody wants their brand to look low-rent on the internet.

    And unless you’re Old Spice working with W&K, you probably won’t have 200 different units produced, so you’ll lose the A/B testing that we all enjoy about web advertising.

    Online video is great. But it’s not the whole solution. Just like the big layer cake of media consumption, where uncool media like AM radio and direct mail still are very useful, banners and search will make room for video, but they aren’t going anywhere.

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