As online advertising spending continues its meteoric rise — the Wall Street Journal is reporting a healthy gain of 20 percent in the second quarter alone — not every form of advertising is enjoying such success. In fact, as economic troubles continue, more and more advertisers are only willing to spend money on search ads and are increasingly ignoring other forms of advertising.
According to eMarketer, search ad spending will reach $10.4 billion this year, more than twice as much as advertisers will spend on display ads. More importantly for Google, search ads will represent 42 percent of all advertising spending, while display ads will account for just 21 percent of all online advertising.
With an economic downturn running amok, Google is quickly becoming one of the few companies that can actually withstand its onslaught. Because search results currently provide the best place for advertisers to spend money and realize a positive ROI, Google’s control of over 60 percent of the search market becomes even more important.
“We believe that if there were (a U.S. recession), we’ll be well positioned,” Google CEO Eric Schmidt said in a recent earnings call.
Generally speaking, search ads are better targeted than display ads. And in an environment where companies have less money to go around, they need to find the best ways to utilize that cash and speak to the target audience. For now, display advertising will not be the best place to spend ad dollars and although Microsoft and others will do their best to compete, Google is still in the cat bird’s seat.