Advertising revenue flows to search engines more than to Web sites
Jamie Poston, media director for Cactus, said the Denver agency’s clients spent about 15 percent of their ad budgets online in 2007.
This year, he said that will almost double. "There’s a lot of money moving over to the Internet, depending on the client, their goals," he said.
Part of the reason is that clients often can track results, thanks to sophisticated software programs offered by search engines such as Google.
"Clients love that," Poston said. "They can tell you on a daily basis what (search) terms are working and what terms aren’t."
Internet advertising has tripled from $7 billion in 2003 to $21 billion last year, fueled in large part by the text ads above and beside Internet search results.
More than 40 percent of all online advertising is spent with search engines, according to a Pricewaterhouse Coopers study sponsored by the Interactive Advertising Bureau. Google controls roughly 60 percent of that market, according to ComScore.
By contrast, only about 20 percent of online ad dollars is spent on display advertising, the banner ads placed on Web sites. Other categories, such as classified advertising and e-mail marketing, make up the remainder.
Given the dichotomy between search and display, many wonder when, if ever, advertising will be able to support the content delivered on the Internet.
Liberty Media Chairman John Malone recently chimed in on the topic with CNBC’s David Farber.
"Everybody talks about the Internet and the huge amount of advertising," Malone said. But he said it looks mostly like Google, and to him that isn’t advertising.
"That’s search. That’s direct marketing."
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