Paid Search Still Strong; Banners and E-Mail Beefing Up

  |  February 19, 2004   |  Comments

Paid search will continue to power online advertising's comeback, butbanners and e-mail will also contribute, according to Jupiter Research.

Paid search's wild ride isn't over, according to a Jupiter Research report predicting that the sector will drive growth of online advertising to $14.8 billion by 2008, helped along by banner ads and email marketing. (Jupiter Research shares a parent company with this publication.)

The growth figures come as part of an in-depth forecast for the next five years released last week. Many of the top-line numbers had been released in a July report.

Internet advertising grew 10 percent in 2003, spurred by a 50 percent surge in paid search, the researchers found. Overall online ad expansion is expected to continue at a rate of 19 percent compounded annually through 2008.

There are four main reasons for this prediction. First, the percentage of U.S. households with Internet access will rise to 79 percent by 2008. Second, broadband penetration will go up, increasing ad inventory. Third, sites are beginning to reserve high-quality inventory for large branding ads sold on a sponsorship or cost per thousand basis. As sites continue to improve yield management strategies, CPM rates will grow 11 percent on average, compounded annually through 2008, Jupiter predicts.

Finally, with slowed growth in direct mail and the body blow of the Do Not Call list to telemarketing, online advertising will fill the gap.

Total online ad spending for 2003 was $6.3 billion, according to the researchers. Paid search accounted for $1.6 billion of this total.

"There's no doubt search will continue to grow," said Kevin Lee, CEO of search marketing firm Did-it.com. "Certainly there's been dramatic growth over the last few years because search marketing works very well."

Lee said the most rapidly expanding aspect of search marketing will be contextual search. "That will drive the growth, that and continued aggressiveness by marketers as more and more marketers join the fray."

While paid search is justly attracting a great deal of industry attention, display ads, including rich media, will begin to recover this year, the report predicted. This is because 46 million U.S. households will have broadband by 2008, fully one-half those online, according to Jupiter. As broadband usage grows, an increased investment in rich media ads will drive display ad spending.

Gary Stein, a Jupiter analyst, noted that display advertising is "still the dominant form of advertising online. Search is growing like crazy, but display ads are still a higher percentage."

The researchers also saw encouraging signs for email marketing, which will show a compounded annual growth rate of 24 percent over the next five years to reach $6.1 billion by the end of 2008, according to the report. Retention email campaigns will continue to account for the lion's share of non-spam email marketing spending.

"Not all categories are going to rise at the same level," Stein said. "Some will rise faster than others and some will rise to greater volumes. But they'll all rise."

ClickZ Live New York Want to learn more? Join us at ClickZ Live New York 2015
[ALERT] Super Saver Rates Expire January 30. With over 15 years of experience delivering industry leading events, ClickZ Live brings together over 50 expert speakers to deliver an action-packed, educationally-focused agenda covering all aspects of digital marketing. Quick! - Register today to secure your place at the best rate.

ABOUT THE AUTHOR

Janis Mara

COMMENTSCommenting policy

comments powered by Disqus

ClickZ Today is our #1 newsletter.
Get a daily dose of digital marketing.

COMMENTS

UPCOMING EVENTS

UPCOMING TRAINING

Featured White Papers

Google My Business Listings Demystified

Google My Business Listings Demystified
To help brands control how they appear online, Google has developed a new offering: Google My Business Locations. This whitepaper helps marketers understand how to use this powerful new tool.

5 Ways to Personalize Beyond the Subject Line

5 Ways to Personalize Beyond the Subject Line
82 percent of shoppers say they would buy more items from a brand if the emails they sent were more personalized. This white paper offer five tactics that will personalize your email beyond the subject line and drive real business growth.

WEBINARS

Jobs

    • E-Commerce Marketing Associate
      E-Commerce Marketing Associate (OmniVista Health) - BaltimoreOmniVista Health is looking to add an E-Commerce Marketing Associate to our expanding...
    • Front End Web Developer
      Front End Web Developer (Agora Financial) - BaltimoreAgora Financial, an independent financial publisher, has an immediate opening for a Front-End...
    • Senior Outside Sales
      Senior Outside Sales (RioSeo) - San Diego~~RioSEO is the leading provider of Local Search technology to multi-store retailers and brands. Our software...