Search Revenue Reaches $8.7 Billion in First Half of 2013

Oct 24, 2013

It’s Time to Reconsider Your Marketing Strategy

It’s no secret kept in Fort Knox that online businesses are spending top dollar on Internet advertising, but what may come as a shocker is how profitable a certain type of ad is.

Of the $20.1 billion that businesses reported in revenue from online advertising, $8.7 billion of it comes directly from search ads.

Why is this such a shocking fact? It represents a very interesting shift in how consumers are browsing the Internet.

So let’s explore just what this means.
search revenue is up

  1. Search Media is More Valuable than Banners, Rich Media and Classifieds

  2. According to the Internet Advertising Bureau, the revenue from search media was 43% of the total revenue companies experienced in the first half of 2013.

    When you add how much banners (19%), rich media (3%) and classifieds (6%) contributed to revenue in the first half of 2013, you come up with a result that falls short by 15%.

    That can lead you to only one conclusion: search result advertising is far more valuable on its own than any other medium of advertising. The simple fact that more revenue is generated from searching has a few more implications, so let’s focus on why search ads are more valuable.

    There’s two possible reasons for this.

    The first is that despite changes to Google AdWords, the most popular search engine ad service, customers are still receptive to search engine ads. They may have subtle differences that allow adept users to tell them apart, but they’re appealing enough for users to still investigate them.

    The second possible reason as to why these ads are so valuable concerns what users are looking for. Companies are branching out to other terms that may not necessarily include their brand name, which means that there’s more views to their ads than ever before. While this doesn’t necessarily amount to a higher click-thru rate, it does give more brand recognition to people who otherwise may not have been exposed by conventional means.

  3. People Still Value Their Time

  4. If you take a gander at the IAB’s report, you’ll see that the section labeled “Historical Format Trends” displays something peculiar. The revenue from digital video advertisement is increasing while rich media is decreasing.

    While it’s hard to prove, it’s safe to assume that the demographics who were most receptive rich media useful are now converting by way of digital video instead.

    The percentages for search revenue and display banner revenue have stayed about the same through the chart. This can lead you to two observations:

    People value their time. Due to search results being listed first in search engines, most customers likely click the first result in an attempt to find the best answer. This is complimented by the fact that Google tends to provide them with the best result first.
    People are still impulsive. Banners and search ads take little time to process. Videos are used to teach the customer what they want. The fact that they are effective but not as profitable is a good indicator that most buying decisions are still made on spur-of-the-moment desire.

  5. Search Revenue May be Increased by Focusing on the Mobile Demographic

  6. The historical format trends offers a clue as to why search ads have stayed as the leading marketing format this year. The focus on developing advertisements compatible for both mobile and desktop users have increased.

    It’s no secret that the mobile market is growing. Google’s last few updates have included changes that allow for semantic searches, which is something that is common from mobile users.

    The drastic 15% increase in the share that mobile marketing produces is a hint that it’s not only a market that is growing fast, but it’s one that is more than willing to spend.

    A theory as to why mobile users make for the most eager customers revolves two key notions.

    The first is that mobile users may be first time Internet users. While they’re not familiar with a computer, they may be wizards are utilizing a smart phone. Compound this with the previous two points and you can see why they may be willing to spend more.

    The second is that mobile devices capable of producing an enjoyable web browsing experience have only become widely available in the past few years with the release of Android phones and the iPhone. This gives people with a moderate amount of disposable income the ability to spend online with just a few clicks anywhere where they can connect to the Internet.

    This allows for both answers to search queries and spontaneous purchases, as mentioned in the second point, to occur anywhere.

    Where Will the Next Half Take Search Advertising?

    The steady search revenue that businesses have historically enjoyed is a side effect of just how necessary search engines are to people. So long as people have questions and a way to seek answers, then there will likely always be a profit in paid search ads.

    If you haven’t done so already, consider carefully weighing how effective your current marketing strategy is. Search ads give your company more exposure, brings willing buyers and can lead to the development of customer loyalty from people who are just truly getting acquainted with the Internet.

    Those are all things that could lead to substantial lifelong profits.