With the explosion of spending on search engine advertising continuing to alter the marketing realm, have there been any ramifications for traditional information entities? According to a new study, it does in fact look like search engine marketing may be pulling revenue away from those who are used to receiving large advertising returns.
According to a study conducted by Outsell, because search advertising has become so popular, traditional informative publications have seen their normal advertising revenues diverted to Google and Yahoo. A widely used quote from Outsell’s report gives an idea of the search engine advertising affect: “they’re [Google and Yahoo] literally sucking the financial air out of the room.”
The Outsell report focuses on the 10 largest information companies, consisting of, according to MarketingVOX: Daily Mail & General Trust, Gannett, McGraw-Hill, Pearson, Reed Elsevier, Reuters, Thompson, Tribune, VNU, and Wolters Kluwer. Money that has normally been traditionally set aside for advertising with these companies has been used for search advertising.
To illustrate their point, Outsell reports the 10-member group generated a combined revenue of $60 billion in 2004, which is $4 billion more than the previous year. Google and Yahoo alone generated $6.5 billion in 2004, which also indicates a year-over-year increase of $4 billion.
The explosive growth, which does outpace the traditional group, is attributed to the exponential increase of search advertising spending.
Because advertising is such a “show me” industry, in order to invest more in another form of advertising, any marketing group worth their salt would have to see a return on investment (ROI), and that’s just what search engine advertising provides. With an estimated 40 percent of online advertising being spent on search, it’s quite apparent that more companies are embracing to this method, while perhaps neglecting the more traditional outlets.
Just because search advertising is moving to the forefront, it doesn’t mean the companies used to receiving advertising revenue are going under. Keep in mind that the 10-member group did in fact earn $60 billion, an extremely large pie portion when compared to Google and Yahoo’s. Conversely, Google and Yahoo’s earnings, although equaling, are actually outdoing these more traditional entities (2 opposed to 10).
However, demands for continuing ROIs and lower CPC rates may also curb the search engine advertising embrace. There are also issues concerning dwindling search engine real estate, although the introduction of ads in emails and RSS feeds does provide additional outlets.
Chris Richardson is a search engine writer and editor for Murdok. Visit Murdok for the latest search news.
