According to eMarketer, search engine ad spending was 21.4 percent higher in 2008 than it was in 2007.

Although the increase was less than the 29.5 percent increase between 2006 and 2007, search advertising is proving to be much more ‘recession resistant’ than other media.
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A Specific Media study of comScore data indicates that display advertising actually increases response to search based ads.

According to Specific Media, there is a direct correlation between display and search advertising. Its analysis found that brand- and segment-related searches for cars, automakers and vehicle classes were 100 percent higher in several categories after consumers were exposed to display ads for those brands.

Supporting these findings, a September 2008 study of Microsoft’s Engagement Mapping system by Atlas Solutions found that searchers exposed to display advertising were 22 percent more likely to buy than those who were not exposed.

Of course, before we all start pouring loads of money into display advertising, we should keep in mind that this research focuses on brand marketers with big budgets. What isn’t apparent is the impact other branding efforts have on display… which in turn may have an impact on search… and whether any of this is relevant to direct response Internet marketers…

Source: eMarketer, “Display Boosts Search Performance,” eMarketer, December 12, 2008

Local media research firm Borrell Associates has forecasted local display advertising expenditure to grow by 2.5 percent, from around $12 million in 2007 to $12.3 million in 2008.

Borrell also believes local online advertising will comprise a larger share of overall online ad spending in 2009, when local online ad revenues are expected to increase 11 percent over 2008 to be around $13.6 million.

Borrell expects local paid search advertising to grow almost 22 percent in 2009, while national paid search is expected to lose share, dropping from $12.4 million this year to $9.3 million next year.

Source: Kate Kaye, “Local Advertisers Are Glimmer of Hope for Web Ad Industry in Downturn”, The ClickZ Network, October 29, 2008

Local media research firm Borrell Associates has forecasted local display advertising expenditure to grow by 2.5 percent, from around $12 million in 2007 to $12.3 million in 2008.

Borrell also believes local online advertising will comprise a larger share of overall online ad spending in 2009, when local online ad revenues are expected to increase 11 percent over 2008 to be around $13.6 million.

Borrell expects local paid search advertising to grow almost 22 percent in 2009, while national paid search is expected to lose share, dropping from $12.4 million this year to $9.3 million next year.

Source: Kate Kaye, “Local Advertisers Are Glimmer of Hope for Web Ad Industry in Downturn”, The ClickZ Network, October 29, 2008

Google and Yahoo are apparently negotiating with the Justice Department to remove its objections to the two companies’ controversial search advertising deal.

As originally planned, the deal would essentially see Google serve up ads for Yahoo search results. Many – from advertisers and publishers to politicians – have expressed concerns that the upshot will be less competition and higher ad prices.

The Justice Department is evidently looking at capping the volume of Google ads Yahoo could show, imposing price constraints to prevent price hikes, and other initiatives to allow a deal to go ahead that would preserve competition.

Source: Michael Arrington, “Will A Volume Cap Make The Yahoo/Google Deal Work?” TechCrunch, October 14, 2008

Not everyone has jumped onto the web 2.0 or social media bandwagon. Many people are happily using the Internet without blogging, tweeting, posting on forums, participating in social networks, and so on.

Which means that if non-web 2.0 users are YOUR target market, you probably need to focus on non-web 2.0 means of reaching them.

Here are a few tips:

1. Consider using traditional media. There’s a thought. What about a direct mail campaign or a telephone call? Even a personal visit (if you’re selling large ticket items that justify it). Not to mention traditional forms of advertising - television, radio, newspapers and magazines.
2. Use ‘traditional’ forms of Internet communications, such as email, display advertising and paid search advertising. Have an email newsletter as well as a blog. That’s what we do here at Kikabink. You can read the blog or get the email newsletter delivered to your inbox each day.
3. Softly sell your prospects on using Web 2.0 or social media content or tools. This isn’t so much a matter of emphasizing that any given content or tool is “web 2.0″ as indicating the value of the content itself. Your target market may not be interested in reading your “blog posts” but MAY be interested in reading your ARTICLES.

What Google may giveth… it may also take away…

Many of us have learned that the hard way. As domainers, search engine optimizers, advertisers and publishers, we’ve seen revenues and profits rise… and plummet… as Google changes its mind about whether it ‘approves’ of our business model or marketing… or not.

Serves us right, eh? If we choose to play Google’s game, we must accept that Google can change the rules any time it chooses. That’s a right Google reserves legally - i.e. when we agree to Google’s terms of use - and as a practical matter, due to its sheer market power.

Or must we just accept it?

When does a company’s exercise of its rights go from simply being ‘unfair’… to constituting an abuse of market power or being ‘unconscionable’?

‘Unconscionable’ is a legal term that has slightly different meanings in different jurisdictions. In general, it loosely refers to contractual terms that are so unfair that no reasonable person would, under normal circumstances, accept them. They typically arise where a party to a contract has much greater bargaining power than the other party and uses this power to extract unreasonably one-sided and onerous rights from the other party.

Successfully proving the existence of excessive market power or unconscionable contracts is generally tough, whether in the United States, Europe, or here in Australia. But there are indications that businesses, large and small, are becoming increasingly uncomfortable with Google’s dominance over the Internet.

For example, the Association of National Advertisers (ANA) recently wrote to the U.S. Justice Department to object to the Google-Yahoo search advertising agreement. And, at the other end of the spectrum, there’s the letter sent by the lawyers of Dan Savage, owner of Sourcetool.com, to voice concerns about Google ratcheting up his Adwords prices due to low Quality Scores.

Warranted or not, I bet those letters to the Justice Department are piling up. Whether it should - or is able - to address some of the concerns remains to be seen.

You know, I would much prefer to see the marketplace - rather than the government or the courts - sort out who wins and who doesn’t when it comes to market share, sales, profits, etc. I’m not convinced that Google is abusing its market dominance. But one thing IS true: none of us can afford to rely on Google for our livelihoods.

Source: Joe Nocera, “Stuck in Google’s Doghouse”, The New York Times, September 12, 2008, Anna Johnson, “ANA Objects To Yahoo-Google Ad Deal”, Kikabink News, September 15, 2008

JP Morgan analyst Imran Khan had lowered his 2008 and 2009 forecasts for online display ads, forecasting that advertisers will shift more dollars away from display and to search and performance-based advertising.

According to Mr Khan, U.S. display ads will grow by 14 percent to reach $8.2 billion this year, down from his original forecast of 20 percent growth and $8.6 billion in sales. He expects display advertising in 2009 to grow by 16 percent and reach $9.4 billion, down from his earlier forecast of 17 percent and $10 billion.

Although Khan believes online advertisers will devote more of their budgets to performance-based advertising, he also predicts growth in search to also decline somewhat. He expects search advertising to grow by 27 percent in 2008, rather than the 32 percent he previously predicted. Presumably this is due to advertisers reducing their overall online budgets.

Source: Michael Learmonth, “JP Morgan Cuts 2008 Outlook For Online Display Ads”, Silicon Alley Insider, September 4, 2008

The Association of National Advertisers (ANA) - the peak body representing corporate advertisers - has formally opposed Yahoo’s plan to outsource some of its search ads to Google.

The ANA, which represents the interests of approximately 400 major advertisers, believes, “The partnership will likely diminish competition, increase concentration of market power, limit choices currently available and potentially raise prices to advertisers for high quality, affordable search advertising.”

The ANA has voiced its opposition in a letter to Thomas Barnett, assistant attorney general of the U.S. Department of Justice.

Meanwhile, indications are that Yahoo and Google believe the deal will raise prices for advertisers. Writing in The ClickZ Network, Zachary Rodgers points out that Yahoo President Sue Decker’s statement that the deal will help Yahoo “deliver financial value to stockholders from search monetization” can only be based on an expectation that better monetization means more expensive keywords.

Regardless of the ANA’s concerns, it’s not clear that the Department of Justice will prevent the deal from going ahead. As Mr Rodgers points out, given Yahoo’s poor financial health, “the matter may boil down to whether regulators decide Yahoo’s continued health is more important than keeping costs low for Internet advertisers.”

Source: Zachary Rodgers, “Marketers Formally Object to Yahoo-Google Pact”, The ClickZ Network, September 8, 2008

A U.S. Congressional hearing on Tuesday saw Google and Yahoo lawyers defending their decision to partner on search advertising.

Meanwhile, Microsoft lawyers complained that the partnership would lead to Google and Yahoo dominating more than 90 percent of the search advertising market and could lead to increased prices.

Um… has anyone pointed out to Microsoft that on some estimates Google and Yahoo already have 98.7 percent of the market?

Source: Austin Bogues, “Google and Yahoo Defend Ad Alliance at a Hearing”, The New York Times, July 16, 2008, Miguel Helft, “Study: Google Lost Share of Search Ad Dollars to Yahoo”, The New York Times, April 15, 2008