The Online Advertising Playbook: Proven Strategies and Tested Tactics from The Advertising Research Foundation

Paid Search Advertising Spending

Paid search dominates marketer spending on online advertising. In 2005, the most recent year for which complete data is available, search attracted $5.1 billion, or 41%, of the total $12.5 billion spent on internet advertising (IAB 2006b). Display advertising, the next highest category at $2.4 billion, claimed just a 19% share of dollars. Revenue for the first half of 2006 shows a consistent spending allocation picture, but at a higher spending level.

Will search remain online advertising’s King Kong? eMarketer (2006g) believes so, projecting search reaching $11.3 billion, just under 40% of the $29 billion total for all online spending in 2010.

Measurement, low entry barriers, e-commerce, and the ability of search engines to aggregate lots of prospects for targeting contribute and justify the growth of search spending.

Search advertising is open to companies of all sizes, not just the deep-pocketed (eMarketer 2006h). It doesn’t cost much to pay to play. The ante for major search engines can be as low as $5. As companies become more knowledgeable about search, analysts expect local search (geographically restricted search) dollars to flow in.

Paid search advertising offers measurability and control historically unavailable offline, which offers the promise of greater accountability to the marketing function. Server log analysis reveals every detail of searching, the keywords used, the ads and results displayed, the clicks made, and the actions taken. ...