Thursday, September 4, 2008

That's What I Thought

A post today on TechCrunch points out that, while online ad spending overall continues to grow at a very healthy 20% rate, more and more of that is going into search advertising, rather than banner ads and other ways to reach customers.

That's not much of a surprise. In a recession, companies are being careful with their money, and search has the great advantage of being an arena in which you know every visitor is actively looking for something (and often they're looking for something to buy). There's no reason not to expect search to dominate online ad spends for a long, long time (and that sound you hear is Google's shareholders rolling back and forth on big piles of money).

The optimists among us will suggest that the real issue here is the growing online ad market, and suggest that an improving economy will bring more dollars to display ads and others. Then the tide may rise high enough to lift all the boats. Until then, sites that hope to turn a profit based on display advertising will probably need to hold out for the long term.