Search Share Grows in 2009, CPA Steals from CPM

Search revenue in the first half of 2009 accounted for 47% of Internet advertising revenues, up from the 44% reported in the second quarter of 2008. Search has more than double the share of 2nd highest category, Display Advertising, which was 22% up from 21% a year earlier

Based on the recent IAB Internet Advertising Revenue Report release by the IAB earlier this week, search revenue in the first half of 2009 accounted for 47% of Internet advertising revenues, up from the 44% reported in the second quarter of 2008. Search has more than double the share of 2nd highest category, Display Advertising, which was 22% up from 21% a year earlier.

Not surprising given the level of qualified traffic that search provides over other forms of interactive advertising and positive impact of running display campaigns concurrent with search initiatives. A key quote by David Silverman, Partner, PricewaterhouseCoopers LLP, the firm sponsored by IAB to conduct the research, “While the overall advertising market has continued to be impacted by current economic conditions, marketers are allocating more of their dollars to digital media for its accountability and because consumers are spending more of their leisure time online.” I couldn’t have said it better myself.

Another key finding in the report is that performance pricing models (e.g. CPA – Cost per Acquisition) are on the rise growing to 58% up from 54% share a year ago versus CPM (Cost per Thousand Impressions) which are on the decline from 44% down to 38% for the same period. The remaining 4% market share purchased on a hybrid model and remained flat. Given the drop in demand for all advertising due to macro economic conditions, it is not surprising that the online media buyers are able to shift the performance risk to the publishers (i.e. buying on a CPA basis) in what some have come to label as a buyers market.

Thoughts?

About

Rick Noel is an experienced digital marketer enabling businesses and organizations to grow through the Internet, while maximizing marketing ROI (Return On Investment). Rick is the CEO and Co-Founder of eBiz ROI, Inc., a full-service digital marketing agency located in Ballston Lake, NY.

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