Let’s start with the subject of display advertising.  Ground was lost during 2009; in a document titled "2010 Internet Industry Outlook," Khan put the change at a negative 5.2 percent.  But he expects that $8.3 billion will be spent on display ads in 2010, which will work out to a year-over-year increase of 10.5 percent.  Not bad.

Then an even more dramatic uptick will occur with respect to search advertising, if Khan’s forecast is correct: spending should jump from $14.6 billion in 2009 to $16.6 billion, an increase of 13.2 percent.  This spells good news for Google, Yahoo, and Microsoft (along with their shareholders).

Finally, it’s possible that anything and everything with ties to mobile advertising will make money this year.  Khan thinks that spending on mobile ads will shoot up 45.0 percent, hitting $3.8 billion following 2009′s $2.6 billion.

Let’s all cross our fingers and hope that these predictions prove true (or better yet, conservative).

Related Articles:

> Are Google’s Ads So Relevant That People Won’t Block Them?

> More Media/Ad Trend Predictions For 2010

> Google Seeking Not To Cross The Creepy Line

To understand why display advertising may scare the frilly underthings off Google, one has to understand the nature of Google’s ad placements. Google has made a multi-billion dollar killing off its little text search ads, and has a market cap of $157 billion because of them.

Google has since sought ways to diversify its ad inventory. Through placements on the Google AdSense partner sites with which it shares ad revenue, Google displays image and video ads, both at a higher premium than text.

That also presents the motivations for Google to bid for DoubleClick, and fortifies its belief that DoubleClick represents a complementary business: display ads versus the contextual kind.

A Bloomberg report cited the figures representing text ads against display ads, and it doesn’t paint a pretty picture:

With growth slowing in the market for text ads, Google set its sights on display and multimedia ads, where total U.S. sales will jump 60 percent by 2011 to $13.7 billion, according to researcher eMarketer Inc. Google has relied on search-linked ads for almost all of its $16.5 billion in annual sales and the sixfold increase in its stock since August 2004.

“Even though Google may be looking forward and seeing this world where they own online advertising, at this point they’re really only owning one flavor,” said Jon Gibs, vice president at the research firm Nielsen Online in New York. “They really are going to be facing quite a giant in the other part of the display ad universe.”

Now we can talk about conversions. Yahoo has enjoyed display advertising success, which they would not do if those ads did not perform to the advertiser’s satisfaction. Couple that with some webmasters in Yahoo’s Publisher Network claiming better conversions than they saw with Google’s AdSense, and The Fear for Google becomes evident.

Delays in approving the DoubleClick deal in Europe cost Google time. Eventually, Yahoo has to do something about the Microsoft bid or face lawsuits from its big institutional investors.

Once Microsoft and Yahoo can sell display ads across Yahoo and MSN properties, the combined firm should rake in the profits. If you think about it for a moment, maybe a successful Yahoo/Microsoft deal helps Google a little bit in arguing the DoubleClick deal won’t be an anti-competitive purchase.

Most impressive, however, was the result from a combination of search and online display ads: a 83% lift in dollars spent in later in-store conversion. The combination also increased incremental in-store revenue 90% (as opposed to 43% with search-only ads and 15% with display-only).

Display ads were also found to increase page views 37%—comparable to search ads’ effect (46%). Together? 68%.

Finally, MediaPost reports:

The study also found that a joint display and search campaign was more effective at converting online researchers to in-store purchasers–as the combination pushed 43% more in-store purchases than search (26%), or display (6%) alone.

The study, “From Clicks to Bricks: The Impact of Online Pre-Shopping on Consumer Shopping Behavior,” was based upon eight months of data from 175,000 comScore participants, and five major retail stores including JC Penney and Office Max.

Comments

Tag:

While display ads were kicked to the curb, when search advertising dared to offer targeted, relevant ads, with auction pricing – how dare they! – they’re making a comeback thanks to the same kind of targeting technology.

Ad-exchange services such as Right Media want to do to display what Google did to search. Exchanges increase the price of ads by letting advertising networks that track Web surfing behavior buy space, in front of users they recognize, on nonpremium Web pages—pages with content that an advertiser doesn’t specifically want to be associated with, such as Yahoo Mail pages. The networks can afford to pay more for these pages because they are delivering even higher priced ads thanks to their tracking information. “By allowing other publishers access to our inventory…we will ultimately achieve premium pricing from both of those elements,” said Susan Decker, Yahoo’s chief financial officer, on a conference call following the announcement.

So, online display ads – which used be called simply “banner” ads – have now grown-up. They’re better targeted to visitors, include more interaction, and are using the same pricing structures that helped search ads become popular. While it’s unlikely that display ads will ever pass search ads in terms of market size, with the help of Google, Yahoo and MSFT, they’re certainly destined to claim a strong second place.

Comments

Tag:

AdSense Has A Yahoo Killing Secret

The rich will get richer if they can conform to the requirements of the Google Display Advertising Network. Entrepreneur John Chow wrote how Google has crafted this new service so it can offer “advertising to build a brand more than to sell a product.”

Chow claimed this effort would target those Fortune 1000 companies, and when it comes to branded display advertising, Yahoo has done well for quite some time on that, even as its contextual ads fell behind Google’s rise to prominence.

The only way to get in to Google’s new network is by invitation. One won’t find it in a Google search or in the help files for AdSense or AdWords. Accept the invitation, and Google will run display and video ads on the target site.

Chow discussed some of the specifics of the plan:

While Chow cannot say what he is making, he does note that a Display Network ad running on his site, The TechZone, is his most profitable advertising property.

Pat McCarthy blogged about this at Conversion Rater, and took issue with the year-long contract requirement and the flat CPM rate for that period:

Supporting this effort will require a significant commitment from Google in terms of staffing a sales and marketing force. Considering their recently opened office in New York city dedicated to that purpose, it now looks like Google just wanted to have agents closer to their desired Display Network advertisers.

Google and Yahoo are both up in Pre-Market trading ahead of the opening bell on Wall Street. Today’s close should be interesting to see as investors begin to respond to this news.

—

Add to Del.icio.us | Digg | Reddit | Furl

Bookmark WebProNews:

David Utter is a staff writer for WebProNews covering technology and business.

Being in the display ad business, I’ve long suspected that Google will make a bigger push into display advertising. Yes, they’ve had display advertising in the Adsense program for a couple of years now, but the results have never been very good for publishers or advertisers from what I’ve heard, and Google has never pushed it.

So as linked above, John Chow is reporting that he’s now part of what sounds like a beta invitation-only Google display network that is a negotiated CPM with Google and a year long contract. This is more interesting than it sounds for a couple of reasons:

1. A year long contract

It’d be nice to know more about what this means, but I’m guessing it may give Google some exclusive right to represent your inventory. This is really to Google’s advantage if that’s the case, and is definitely not a step towards what we preach at Right Media about competition and working with multiple parties being the most beneficial to the publisher. It is possible the contract just holds the rate you agree on to be steady, which may sound good on the surface to the publisher, but actually can hurt you. If you lock in with Google at a $5 CPM for a year, what happens if you have advertisers coming to you willing to pay much more but you’re allocating inventory to Google to fulfill some contract? While I need more details, I don’t like the idea of a year long contract from a publisher point of view.

2. A Flat CPM

This means Google would be doing a guaranteed buy. So again let’s say that’s a $5 CPM flat buy. That may again sound really nice to you as a publisher to have that guaranteed rate, but that allows Google to go sell your inventory at whatever price they want, and only give you a $5 CPM. What if they can sell it for a $10 CPM to the advertiser? Are you happy with a 50% revenue share? I wouldn’t be. It also goes against how Google has normally worked in advertising with their pay per click roots.

What does this really mean though? These moves aren’t surprising. Display is a part of online advertising where Google has been weakest, and they are butting in to all forms of advertising. It’ll be interesting to see if they make headway here, or if they fail like they have in some other areas outside of their core offerings (auctioning print ads). It does help explain them building up their New York offices and hiring more traditional media sales people. They also have a very large core of advertisers they work with through Adwords, so I don’t doubt they can get some advertisers on board.

It also moves them along in a trend we’re seeing with the bigger online companies starting to “rep” other companies. Yahoo’s sales team now sells ads for Ebay as well as all the Yahoo properties, and I wouldn’t be surprised to see Yahoo sell inventory across other publishers and networks in the future with their strong display sales force. MSN also now sells ads for Facebook and they’ve openly said they’d like to start an advertising exchange.

Why no announcement though? Well, it could be because it’s so new. It could also be them sticking their toe in the water without jumping in and having it fail. Their was a lot of press about Google launching a beta CPA network months ago that shared some similar traits as this display network by being invitation only and publishers only getting email reports. There hasn’t been much said about that CPA network since. Was it a failure? Are they still building an interface? Why is Google beta testing the CPA network and the display network with no interface for publishers to use? Perhaps they aren’t so committed yet?

Directly repping premium inventory in this way can be a good business, but in some ways it would be a step back in advertising for Google. They created an automated machine with Adwords/Adsense that makes unbelievable profit, but repping premium inventory is a very manual business. Evidence of that would be negotiating CPMs with each publisher directly. Those types of things can make it harder to scale.

Spreading themselves in so many advertising areas could end up being genius for Google, or lead to their ultimate undoing. We just don’t know yet, and it will be interesting to watch.

Related Posts:

• Solving Advertising Problems With Technology
• Is Google’s CPA Network a Big Deal?
• A Wise Analysis Of Our Yahoo Deal
• Contextual Text Ads Get All The Hype But…
• Why Bloggers Need Ad Servers

Comments

Tag:

Add to Del.icio.us | Digg | Yahoo! My Web | Furl

Bookmark WebProNews:

Pat is the Director of Business Development at Right Media, the business unit owner for RMX Direct, and the author of the Conversion Rater blog.