Tuesday
In ‘search’ of an online ad rebound
By Jane Weaver, MSNBC
http://www.msnbc.com/news/938669.asp
July 14 — Yahoo!’s purchase of Overture Services for $1.6 billion adds momentum to the rebound in the Internet advertising market. Search-related advertising has been the big success story of the year — with paid-search revenues doubling on average for the past 12 months — but it’s not the only category that’s driving the Web’s comeback, analysts say.
• Buy Life Insurance
• eDiets Diet Center
• Yellow Pages
• Get A Loan
• expedia.com
• Shopping
AT A TIME when Internet advertising has been struggling to recover from the dot-com collapse, paid search revenues have “fueled Yahoo’s growth and increased profits,” analyst Safa Ratschy wrote in a note Monday, just before the deal to acquire Overture was announced. When Yahoo reported quarterly earnings on July 9, the company said its paid-search business more than doubled during the quarter.
Yahoo’s not the only Web portal benefiting from the paid listings boom.
Search-related advertising — where marketers pay to have their Web site links listed at the top of Internet search results—have doubled on search engines such as Google, Yahoo! and MSN in the past two years from $500 million to over $1 billion, according to Overture estimates. Search engine executives project that paid listings will grow to about $8 billion a year in the next five years.
Overture has 80,000 advertisers. Yahoo’s rival, the privately-held Google, has 100,000. Over half of the advertisers are in business-to-business categories, according to research firm eMarketer, with the others consisting mostly of small and medium-sized business selling a vast range of products and services.
The marketers pay for placement at the top of the page when a person searches for a service or product such as DVD players. The fee is split between the search engine or portal and the listings provider.
Search-related advertising isn’t closely researched yet, so there’s no clear indication of how well it works, but because the ad placement is highly targeted, click-throughs to the targeted links can reach 17 percent, Overture has claimed.
Yahoo! Inc. (YHOO)
price change
30.59 -0.46
“For an advertiser, there’s no more efficient marketing vehicle out there,” said Geoff Ramsay, chief executive of eMarketer. “In paid search, you only pay for what gets results.”
For Yahoo, the Overture acquisition brings 80,000 smaller businesses into its portfolio of advertisers. It also means the Web portal can sell premium services like hosting and storefronts to those new clients, industry observers note.
But the biggest question remains, what will the deal mean to Microsoft’s MSN, one of Overture’s largest partners?
“Ultimately Microsoft will seek another provider,” says Danny Sullivan, the U.K.-based editor of industry newsletter SearchEngineWatch.com. “MSN wouldn’t necessarily want to be funding their competitor.”
[MSNBC is a Microsoft-NBC joint venture]
MSN project manager Lisa Gurry said it’s too soon to say how the Web portal will react to Overture being owned by its chief rival. MSN’s total ad revenues grew 50 percent by the end of fiscal year 2003, driven partly by paid search, she noted.
“Across the board, there’s no short-term impact to our business,” she said. “We’ll evaluate and determine what is the best long-term strategy going forward.”
Yahoo’s purchase of Overture is likely to make search advertising more appealing to premium marketers, says Gary Stein, analyst with Jupiter Research in San Francisco.
“Yahoo has a plethora of services to offer beyond just a search listing,” says Stein. “They can also offer a content sponsorship or home page ad [with the keyword].
The downside for consumers? If portals go overboard trying to monitize their searches and tip the balance between advertising and content in their results.
“The danger may be that the search engines get so entrapped with paid, they push up the percentage of things on the page that are paid,” says Sullivan. “You could potentially see 75-80 percent of listings being paid.”
THE COMEBACK
While Yahoo’s purchase of Overture shines the light on paid listings, online advertising overall has been experiencing a comeback this year, aided by blue-chip, brand-name marketers.
Search has been a bright spot for online in the last few years, “but it’s not the sole success in Internet advertising,” said Leff Lanctot, vice president of media for interactive agency Avenue A, which handles online advertising for Best Buy, Weight Watchers and Microsoft. “Rich-media is seeing as much growth as search.”
Rich-media, or multimedia Web ads that use Flash animation and feature audio or video, are a key part of online advertising’s comeback.
High-speed Internet access at home now reaches 36 percent of the U.S. population, according to online measurement firm Nielsen/NetRatings, which means Web sites can use larger ad formats that get better responses from consumers. At the same time people with a broadband connection tend to spend 30 percent to 40 percent more time online, based on industry research.
As a result mainstream consumer advertisers are moving more of their marketing budgets to the Web.
Playing now:
• Nasdaq edges up
• Latest earnings from Alcan, Cendant
• Texas Instruments posts a profit
In its recent “Advertising Spending” report, eMarketer forecast that U.S. online ad spending will inch up to $6.3 billion in 2003, a 4.8 percent rise over last year, the first year-over-year increase since 2000. TNS Intelligence/CMR, an advertising research firm, forecast in June that Internet advertising would grow 7.4 percent this year. Goldman Sachs upped its online ad spending projection for 2003 to $5.9 billion from a prior estimate of $5.4 billion.
Multimedia ads — which can appear on top of a Web page or pop-up between pages — make up only 5 percent of online ad spending right now, according to the Interactive Advertising Bureau. That percentage is expected to grow as new formats such as the half-page ads used by the NYTimes.com and full-screen commercials from the technology firm Unicast become more widespread.
Unicast began offering Web publishers full-screen commercials 2 months ago and already a number of entertainment, automotive and consumer packaged goods companies have been using them, says senior vice president Allie Savarino.
“A full-screen ad gets 100 percent of consumer attention,” says Savarino. “We not only see advertisers moving to that with greater support, but, in the future you could have multiple full-screen ads in a break similar to multiple commercials in a TV break.”
Sites such as the NYTimes.com have been running full-page ads which appear for about 10 seconds between pages.
“Our advertisers have been very pleased with the full-page ad format,” says Jason Krebs, vice president of NYTimes.com.
Rich-media’s distribution across the Web should also get a boost from the deal announced Monday between Internet ad firm DoubleClick and software-maker Macromedia. The companies said they have built a technology that cuts down the time needed to place advertisements online.
The current rich media process is complicated with a lot of chance for error,” says Doug Knopper, DoubleClick’s vice president of online advertising. “We’re making the process more streamlined and easier to use so advertising agencies can focus on better creative as opposed to focusing on the technology.
By Jane Weaver, MSNBC
http://www.msnbc.com/news/938669.asp
July 14 — Yahoo!’s purchase of Overture Services for $1.6 billion adds momentum to the rebound in the Internet advertising market. Search-related advertising has been the big success story of the year — with paid-search revenues doubling on average for the past 12 months — but it’s not the only category that’s driving the Web’s comeback, analysts say.
• Buy Life Insurance
• eDiets Diet Center
• Yellow Pages
• Get A Loan
• expedia.com
• Shopping
AT A TIME when Internet advertising has been struggling to recover from the dot-com collapse, paid search revenues have “fueled Yahoo’s growth and increased profits,” analyst Safa Ratschy wrote in a note Monday, just before the deal to acquire Overture was announced. When Yahoo reported quarterly earnings on July 9, the company said its paid-search business more than doubled during the quarter.
Yahoo’s not the only Web portal benefiting from the paid listings boom.
Search-related advertising — where marketers pay to have their Web site links listed at the top of Internet search results—have doubled on search engines such as Google, Yahoo! and MSN in the past two years from $500 million to over $1 billion, according to Overture estimates. Search engine executives project that paid listings will grow to about $8 billion a year in the next five years.
Overture has 80,000 advertisers. Yahoo’s rival, the privately-held Google, has 100,000. Over half of the advertisers are in business-to-business categories, according to research firm eMarketer, with the others consisting mostly of small and medium-sized business selling a vast range of products and services.
The marketers pay for placement at the top of the page when a person searches for a service or product such as DVD players. The fee is split between the search engine or portal and the listings provider.
Search-related advertising isn’t closely researched yet, so there’s no clear indication of how well it works, but because the ad placement is highly targeted, click-throughs to the targeted links can reach 17 percent, Overture has claimed.
Yahoo! Inc. (YHOO)
price change
30.59 -0.46
“For an advertiser, there’s no more efficient marketing vehicle out there,” said Geoff Ramsay, chief executive of eMarketer. “In paid search, you only pay for what gets results.”
For Yahoo, the Overture acquisition brings 80,000 smaller businesses into its portfolio of advertisers. It also means the Web portal can sell premium services like hosting and storefronts to those new clients, industry observers note.
But the biggest question remains, what will the deal mean to Microsoft’s MSN, one of Overture’s largest partners?
“Ultimately Microsoft will seek another provider,” says Danny Sullivan, the U.K.-based editor of industry newsletter SearchEngineWatch.com. “MSN wouldn’t necessarily want to be funding their competitor.”
[MSNBC is a Microsoft-NBC joint venture]
MSN project manager Lisa Gurry said it’s too soon to say how the Web portal will react to Overture being owned by its chief rival. MSN’s total ad revenues grew 50 percent by the end of fiscal year 2003, driven partly by paid search, she noted.
“Across the board, there’s no short-term impact to our business,” she said. “We’ll evaluate and determine what is the best long-term strategy going forward.”
Yahoo’s purchase of Overture is likely to make search advertising more appealing to premium marketers, says Gary Stein, analyst with Jupiter Research in San Francisco.
“Yahoo has a plethora of services to offer beyond just a search listing,” says Stein. “They can also offer a content sponsorship or home page ad [with the keyword].
The downside for consumers? If portals go overboard trying to monitize their searches and tip the balance between advertising and content in their results.
“The danger may be that the search engines get so entrapped with paid, they push up the percentage of things on the page that are paid,” says Sullivan. “You could potentially see 75-80 percent of listings being paid.”
THE COMEBACK
While Yahoo’s purchase of Overture shines the light on paid listings, online advertising overall has been experiencing a comeback this year, aided by blue-chip, brand-name marketers.
Search has been a bright spot for online in the last few years, “but it’s not the sole success in Internet advertising,” said Leff Lanctot, vice president of media for interactive agency Avenue A, which handles online advertising for Best Buy, Weight Watchers and Microsoft. “Rich-media is seeing as much growth as search.”
Rich-media, or multimedia Web ads that use Flash animation and feature audio or video, are a key part of online advertising’s comeback.
High-speed Internet access at home now reaches 36 percent of the U.S. population, according to online measurement firm Nielsen/NetRatings, which means Web sites can use larger ad formats that get better responses from consumers. At the same time people with a broadband connection tend to spend 30 percent to 40 percent more time online, based on industry research.
As a result mainstream consumer advertisers are moving more of their marketing budgets to the Web.
Playing now:
• Nasdaq edges up
• Latest earnings from Alcan, Cendant
• Texas Instruments posts a profit
In its recent “Advertising Spending” report, eMarketer forecast that U.S. online ad spending will inch up to $6.3 billion in 2003, a 4.8 percent rise over last year, the first year-over-year increase since 2000. TNS Intelligence/CMR, an advertising research firm, forecast in June that Internet advertising would grow 7.4 percent this year. Goldman Sachs upped its online ad spending projection for 2003 to $5.9 billion from a prior estimate of $5.4 billion.
Multimedia ads — which can appear on top of a Web page or pop-up between pages — make up only 5 percent of online ad spending right now, according to the Interactive Advertising Bureau. That percentage is expected to grow as new formats such as the half-page ads used by the NYTimes.com and full-screen commercials from the technology firm Unicast become more widespread.
Unicast began offering Web publishers full-screen commercials 2 months ago and already a number of entertainment, automotive and consumer packaged goods companies have been using them, says senior vice president Allie Savarino.
“A full-screen ad gets 100 percent of consumer attention,” says Savarino. “We not only see advertisers moving to that with greater support, but, in the future you could have multiple full-screen ads in a break similar to multiple commercials in a TV break.”
Sites such as the NYTimes.com have been running full-page ads which appear for about 10 seconds between pages.
“Our advertisers have been very pleased with the full-page ad format,” says Jason Krebs, vice president of NYTimes.com.
Rich-media’s distribution across the Web should also get a boost from the deal announced Monday between Internet ad firm DoubleClick and software-maker Macromedia. The companies said they have built a technology that cuts down the time needed to place advertisements online.
The current rich media process is complicated with a lot of chance for error,” says Doug Knopper, DoubleClick’s vice president of online advertising. “We’re making the process more streamlined and easier to use so advertising agencies can focus on better creative as opposed to focusing on the technology.
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