Online Advertising and Search Forecast: Projecting Growth through 2009

Dec 13, 2004 • 11:33 am | comments (0) by twitter Google+ | Filed Under Search Engine Industry News
 

The forum was led by Gary Stein, a senior analyst with Jupiter Research. He thanked everyone for coming to the conference. He introduced Niki Scevak, another analyst who would be discussing the forecast models that are driving the number presented in the session.

Things are going to surge. He displayed a graph detailing in billions how search has grown since 1997, which started with a projection of $0.9 billion for search, display, and classifieds. It will grow to be about 19 billion by the year 2009 and flatten out slowly after that. He explains that in 2002-2003 the bottom did not fall out of the internet. Internet services grew and so did resources. What fell out was the business idea, companies that were not built on a lot of solid ground. Over the last three years advertising flatted out, so there was no need to build it back up.

They are currently looking to see search to flatten out.

Questions from audience. What are the definitions of display? Gary explained that its anything that is paid to a third party, so its not search engine optimization. Contextual advertising is included in the "display" category. The classified session includes the listing fees paid by people to get included in the pages. This does not include eBay.

Gary pulled up another slide and explained that online advertising is an excellent way to build branding. It does have a lot of room to grow. He goes on to explain that online advertising will be larger that magazine advertising. I find that quite interesting. He explains that magazine advertising has been suffering in the last few years. Its not a huge surprise that magazine advertising will be taken over. They will need to look at how they sell advertising in magazines. It will not work anymore to sell just the opening spread.

Gary explained that rich and steaming media will quadruple by 2009. Its projected to be a 3.8 billion dollar industry by the year 2009. 2009 seems to be a magic number in this session, and I am not exactly sure why. He explains that rich media will make the user experience better. Gary gave a good example, that a banner ad has yet to make someone cry. The creative palate will expand, and there is growth that will happen in many areas.

We just celebrated the 10th anniversary of the banner. Before, just having a banner on the internet means you have arrived. This is not the case in any more. The internet there is a myth of perfect measurement. CTR rates can fall through the fall, and as we get away from this we will understand how to better measure the effectiveness. A rising CPM is really a rise in value.

Paid search growth remains strong, but slow in the beginning. It is broken into to sections, paid listings and paid inclusion. Where paid inclusion is what you pay to get into a search engine. Gary says that paid inclusion will morph and change. He says some SEO companies like paid inclusion, by listing the in Site Match first to get an idea of how the spider reacts to the site, before they do any optimization. I do agree with this, its a good idea.

There will be increasing cost per click driving spend up. As more Fortune 500 companies get into this space the CPC will go up gradually. Conversion may go down because of this. People will need to understand the value of your keyword. If you understand this it will help you compete in the market. First thing you need to do is get your metrics in order. Second, identify the costs involved in order to get an idea of cost. Gary gave an example of a lightening company (which I have heard before) that has a better ROI than there competitors. They have optimized there landing pages.

I have heard a good deal about local search, and many are seeing a value proposition contained within this segment. Gary goes into what he believes will keep this segment growing. He explains though that local search will grow more slowing than other areas.

Paid search will experiences strong near-term growth before slowing with market maturity. There will be issues stifling growth for paid search, such as language barriers and currencies. Gary said that with any given technology it can only expand up to 20%. The reason, as more people adopt the technology it will become easier for more people to see the value, or if its within arms reach. As the internet becomes more of a resource, we will see more growth but for now its not there yet.

There are many people who use the internet daily to avoid information lapses. He explains how we look at the internet, as something we go into a room and use. Its transforming. Look at college students and teens. Its engrained in to their lives. Google has become a default behavior. Why should I know what a fathom is? I can just look it up on Google. In general people feel that the information is getting better in the search engines (?). Gary, explains a Harvard study to see how satisfied people are with search. They are, but is a LOT of work. There are latent needs for improvement. What they want is better returns, not sliders, dials and rankings. Good example, remember DOS, great tool, but a LOT of work.

Google has a fantastic market share, I have heard 47%, Gary says its around 45-60%. He believes that people do not need personalization in search. Interesting. He gives an example of Ask Jeeves that who has taken this on, and looks forward to see what the search engines will do relating to this. Danny Sullivan has a great article on search personalization on Search Engine Watch. Check that out if interesting in more information on personalization. Gary goes into more detail about the results from Harvard. He says that people will expand their keyword lists to get more out of their experience.

Things to pay attention to in 2005, consumer edition.

  • Look at vertical search, there will be a good deal of data intensive jobs (doctors, architects, engineers). It will be interesting to see how search engines integrate this into their mix.
  • Watch out for a search interfaces. It may be important to put an interface everywhere and an index to go with it. I don't see how this will make things better however
  • Also look at audio and video search, a market that is growing. (link to article).

Additional things to pay attention to in 2005, business edition.

  • Market compression, especially for contextual ads
  • Fraud as a primary underminer of confidence. Google has stated this is a threat to there business model as stated at a recent investor conference
  • Big players missteps, capitalized upon by small players. Just look at other companies that have adopted similar services as Yahoo and Google.
  • The data market may be getting some controls

There were some questions from the audience. One was about the percentage of people that click on organic listings as compared to paid listings. Out of every 7 queries in a search engine, 6 people click on algorithm listings as opposed to paid search listings. I am not sure where this number is coming from. But Niki Scevak, explains they look at records of companies and define where the amount of sales is coming from. It depends on a variety of factors. Some from the audience mentions that presentation of the ads (such as those that look like organic listings I assume) can increase click through rates for paid listings. I know one example in general is how Ask Jeeves uses advertising above the fold of their search engine results. There is a good deal of ads, and we know they are ads.

Side Note: Internet access is pretty limited. Its seems Barry and I are going to have to make due in the press room. Push away a few computers, contend for DSL ports. Its rough. :-) WIFI would make this facility world class.

Previous story: Shooting the Breeze with Ammon Johns - Worldwide Leading SEM Expert
 

Comments:

No comments.

blog comments powered by Disqus