The Decline Of Search Advertising

Garrett · #1 (**permalink**) 12-31-2003, 11:36 AM

Will 2004 bring a decline in search advertising? See what Shari thinks and add your own opinions.

Search Advertising Decline. I also predict that search engine advertising will slowly begin to cease being the "hot" thing. People still don't understand that search engine advertising is not too different than banner advertising. Instead of a graphic image, you have text ads. What are they doing with text ads? You can change the font, the colors, the borders. Not anything banner advertisers used to do, huh?

I predict that click-through percentages will eventually become the same percentages as banners. Maybe not in 2004. But the decline is already beginning to show.

Shari Thurow
http://www.grantasticdesigns.com

**mjtaylor** · #2 (**permalink**) 01-02-2004, 01:27 PM

I have to respectfully disagree. I don't think most users realize sponsored links are paid. Most people I talk to seem to think that sponsored means "approved" ... another kind of directory listing.

On the other hand, it seems to be clear to most end users that banners represent paid advertising.

My experience with client sites is that even when I have them in the Number 1 position on keywords for free results, they get more traffic and business from their sponsored links ... simply because those links appear above the free results, I suppose.

That appears to be true even in Google, where the ad usually appears in the little boxes on the right.

Just my experience ... happy new year to all!

MJ

w4an · #3 (**permalink**) 01-02-2004, 03:17 PM

I think what will change is the amount people will be willing to pay for the ads. I believe this will mostly decrease as time marches on. The good news for Google is that the number of advertisers will far exceed any losses in revenue from lower click through rates.

I have first hand experience with this with two clients:

Client-A is spending thousands of dollars per month with Google and happy to do so. When he signs up a new customer, he could see revenue from this customer for years. So the return on investment is high.

Client-B is more the norm. This client is selling a widget for $29.95 or $99.95. There is virtually no chance for a follow up sale. I've yet to see this type of client successfully use Google paid advertising successfully.

Client-A is the exception, not the rule. Client-B is the typical guy, and until Google can get their advertising rates down, these clients probably will not be using the engines.

Just one man's take on it.

randallm · #4 (**permalink**) 01-02-2004, 04:04 PM

There's a HUGE difference between Banner ads and paid placement in a search engine. With sponsored links, you appear when the user has entered relevant keywords, and is looking for your product. With Banner ads, the ad shows up any time the user is looking at something related to your keywords.

99.9% of the time when I'm on a web site, I ignore the banner ads. But every time I do a search, I check the paid placement links, because I assume they're related to what I'm looking for.

mediahound · #5 (**permalink**) 01-02-2004, 04:39 PM

Quote:

Originally Posted by Garrett

Shari: I predict that click-through percentages will eventually become the same percentages as banners. Maybe not in 2004. But the decline is already beginning to show.

What are your (or anyone else's) CTR with adwords, as a webmaster business partner, not an advertiser.

I have adwords across hundreds of websites, many categories of topics. My ctr is floating a few points over 2%. What do you see it decling to, and from what number as well?

- Jarred

incusa1 · #6 (**permalink**) 01-02-2004, 05:10 PM

Since actively advertising on the internet since 1994, (wow...ten years already) We've seen the "boom" and "doom". In 2000 we paid GOTO (now overture, bought out by Yahoo, funny that it all ends up in the wrong hands) over $560,000 in advertising (small operation). In 2003, only 7200.00. Why? We ventured out to traditional advertising by picking up accounts that use our services on a continous basis. We pay for the advertising once, set up the accounts and get repeat business. I have to admit, we paid Google $140k last year, not bad considering the ROI, however this is drastically reducing as well. The time and effort to try and maintain a top 10 position with all the changes in the search engine algorythems (spelling check please) turns out to be more time consuming for very little results. We plan on reducing our presence on the internet and increase our physical presence to our clients and work for referrals in the same manner. What's my prediction, only a few engines will survive, most are owned by a handful of companies now. What ever happened to the use of Lycos, AltaVista, Dejavu (there's a blast from the past!) I would claim that 99% of the users use Yahoo or Google and MSN by default only, choice being the first two. A sure thing is that advertisers are not going to want to pay (we were as high as 19.00 a click) for "stupid" clicks" , the clicks that people didn't mean to click or the "malicious" clicks by competitors . We've had several thousand dollars refunded by Overture, Ah-ha, Looksmart, Findwhat, because of automated programs developed to do a search, recognize a competitor and result in a click and charge to your account. Nope, not this advertiser, we're going traditional, advertise during our "peak" time, turn the advertising off like we open and close our doors at the office.

I think it is important that if you plan on continuing your internet advertising campaign, that you recognize your industry peak time, advertise only on the ppc search engines that allow a "turn-off" button and advertise only during those times to increase your return. Beleive me, it works! However it is up to you to determine when most people or consumers buy your product, when they're searching for your product / service, and then go from there.

Imagine, if all advertisers stopped paying for the click what would happen to the ecommerce economy. WE wouldn't have to pay for something that was intended to be free! Remember the "INFORMATION SUPER HIGHWAY"...now it's the "ADVERTISERS SUPER PAYMENT SYSTEM".....Just a few comments, the internet is here to state, ecommerce is here to stay, however if you have the opportunity to build your business with ecommerce and traditional methods, use the internet until your traditional or bricks and mortar business starts to show results, you'll be better off and most of all, you'll be generating income without the advertising cost.

Jm

EugeneK · #7 (**permalink**) 01-03-2004, 12:21 PM

I think decline perdition is wrong in part (their will be decline in specific areas and for certain tackiness but growth in usage)
We are in a growing trend I think right now people over pay for unsure costumers and that potential traffic gets lost in the mix.
But with the factual growth and things like a google now having a top 20 ranked news source show growth.
As more and more buyers become online friendly I think you will see evolution in the form of advertising.
Simple exposure base cost $$ and the larger the base the more the $$ in PPC you still have exposure for all searches you are toped on this creates barding and label awareness (assuming you do brand yourself in those 2 short lines)
People = advertising cost if you buy a commercial what guarantee is their that you will get a turn on your investment.

Dragonsi · #8 (**permalink**) 01-03-2004, 02:55 PM

I believe that more and more net users are going to SE's to look for something rather than search from a portal site or ISP site. This would mean that it would be better to place adwords in SE's if your site doesn't have a fantastic PR.

When I use Google to search, I have no problem clicking on the sponsored links, if the site is not what I require, 'Back' I go and search some more. If the site is getting visitors but not sales, then capital will soon run out..

I have stopped my own adwords during these tricky few months of the year and already I have noticed a 40% drop in visits - this could also be seasonal as less people are generaly surfing at this time of year.