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What will it take for display to be as big as—or bigger than—search?

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What will it take for display to be as big as—or bigger than—search?

I recently had the privilege of speaking at the Kelsey Group ILM 2009 Conference. During my presentation, I said that I thought online display advertising had the potential to eclipse search in the next five years.

Yes, you read that right. Sure, search advertising is a $10 billion industry, with nearly 1.5 million advertisers. Display advertising is only a $6 billion dollar industry, with about 50,000 advertisers.

But I didn’t say that because the conference had an open bar.

I want to follow up on my assertion here, and outline for you why I see that potential—and I welcome any responses. Feel free to tell me if I’m in left field, or on the right track.

So how has search advertising (PPC) become a $10 billion industry anyway? It’s simple: search offers predictable results, straight-forward targeting, and clear metrics that demonstrate return on advertising spend (ROAS).

As a result, search ads have become an advertising mainstay. But thanks to advances in technology—like our platform here at AdReady—display can offer those exact same benefits. Even for small- and medium-sized business previously priced out of display advertising.

What’s more, display can do things that search can’t, like scale well and build a brand.

Most analyst firms believe that search will remain a marketing juggernaut for years to come. For example, Forrester says that U.S. interactive marketing spend is projected to reach $55 billion by 2014, making up 21 percent of all marketing spending. Search marketing will lead the growth, totaling $31.5 billion by 2014, followed by display advertising, which will total $16.9 billion.

So how could display advertising launch a coup d’état and overtake search? Four key areas pique my interest:

1. Cost/Scale: Search can get expensive. Especially if you want a hot keyword. And often, search lacks scale. Search marketing is getting saturated, driving up costs, and driving down overall effectiveness for the mass market. Most search marketers have unspent search budget. They simply can’t spend everything they would like to. Display offers a great opportunity to spend that budget. And believe it or not, the best display advertisers are spending more on display than on search, to the tune of 2x to 10x.

2. Market Size: There are nearly 1.5 million search advertisers as compared to approximately 50,000 display advertisers, according to Google. Simply stated: what would the display market look like if it had 500,000 more advertisers?

3. Offline vs. Online: Offline advertising costs still dramatically eclipse both search and display, even as consumers spend more time online and less time with offline media. We’re already seeing the transfer of marketing budgets from offline to online (some $144 billion offline according to Interpublic Group media agency Magna), and that will only increase. Search just doesn’t have the scale to accept those budgets.

4. Search/Display Combination: The Atlas Institute reports a 22 percent increase in click-through rate (CTR) when companies run search and display campaigns together. When search and display are combined, they provide a significant lift in onsite engagement, and an increase in online and offline purchasing by consumers exposed to integrated campaigns.

None of the above is a slam dunk for knocking search off its dominant position—but taken together, they highlight some serious potential for making display a much more formidable competitor. Even Eric Schmidt said recently that display and mobile are Google’s two key areas of growth.

No matter what else happens, the market is going to grow dramatically as platforms such as AdReady’s continue to evolve—and demonstrate the ability to deliver successful ROAS. A couple years down the road, I believe that a lot of people will be surprised when they see how big a piece of the pie display ends up getting.

What do you think?

Posted by Aaron Finn on Feb 03, 2010   |   Tweet This |   Email This