Web Search-Ad Revenues Defy Economic Downturn
Web Design & Technology News, October 07, 2008

October 07, 2008

Despite an economic downturn, Web advertising — and search in particular — is managing to keep its market intact, according to reports on Tuesday by an industry trade group and Wall Street analyst.
By Dawn Kawamoto

According to the Interactive Advertising Bureau, internet advertising revenues rose 15.2 percent, to $11.5bn during the first six months of the year, compared with the same period last year. And search advertising grabbed a larger piece of the share, accounting for 44 percent of the market — up three percentage points.

Search advertising generated nearly $5.1bn during the first half of the year, up 24 percent from a year ago. Display advertising, meanwhile, also grew at a double-digit pace of 19 percent to $3.8bn over the course of the first half of the year.

As for the third quarter and the market meltdown during the early days of the fourth quarter, two players in Web advertising say conditions are remaining stable, according to a Tuesday report by JPMorgan analyst Imran Khan.

Search-engine marketing (SEM) companies such as Didit and Reprise Media report that third-quarter search budgets were up, mainly due to a shift from more traditional marketing to search advertising.

Didit.com, which manages 100 accounts, with an annual advertising budget of $150m to $200m, and Reprise Media, which has 80 clients, with a minimum ad spend of $100,000, report that their respective customer bases increased their search advertising budgets by anywhere from three percent to seven percent in the third quarter, compared to the previous quarter.

And these advertising companies noted that one of the contributors was the emergence of new categories for search advertising, such as pharmaceuticals and entertainment.

Khan, in his research report, noted: "We feel comfortable with our US search-advertising revenue estimates. As we are seeing our thesis of increased performance-based Web ad spend play out, we are comfortable with our 2008 US search-advertising revenue growth estimate of 27 percent year over year. We also feel that our [third quarter] estimate for low-single-digit sequential US revenue growth at Google is achievable."