What 2007 Ad Spending Means to Microhoo
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News Analysis. Yesterday's TNS Media Intelligence report puts some perspective on Microsoft's hostile Yahoo takeover. |
Overall ad spending grew a paltry 0.2 percent in 2007, year over year, to a whopping $148.99 billion, according to TNS. Spending declined in most major categories, such as newspapers and radio. By contrast, online display ad spending soared 15.9 percent—$11.3 billion compared with $9.75 billion in 2006.
Yahoo remains the leader in display advertising, which is part of the company's appeal to Microsoft. But display advertising is only a portion of online ad spending. According to a February IDC report, online ad revenue reached $25.5 billion, or growth of 27 percent year over year. For Microsoft, Yahoo is the way to jump past Google in display ads and push into other online ad areas, particularly those directly related to search.
Display advertising's value recently came under scrutiny. Last month, ComScore found that just 6 percent of online users accounted for half of all display ad clicks. These "heavy clickers" do not demographically represent the people advertisers are trying to reach. Heavy clickers tend to have household incomes less than $40,000 a year and be between ages 25 and 44. The majority of Internet users may suffer from what some analysts call "banner blindness."
While IDC claims that online ad spending pulls money from other sources, TNS' comprehensive report doesn't necessarily support that conclusion. Online display advertising accounted for a paltry 7.6 percent of ad spending in 2007, up from 5.3 percent in 2004. Spending declines were greatest for newspapers (-5.6 percent), although the subcategory of national spot radio declined more (-7.1 percent). For comparison, TV ad spending was $64.4 billion and magazines $30 billion. Even declining newspaper ad spending, at $26.3 billion, eclipsed online display advertising.
But category spending declines may reveal where online display and search-related advertising do pull some dollars from other channels. Local advertising declines are significant: down 10.2 percent year over year for spot TV, down 5.6 percent for local newspapers and down 2.7 percent for local radio.
Google and Microsoft have heavily invested in local search, with Google commanding a decisive, early lead. But the advertising benefits are less about banner ads and more about keywords and contextual search. Those are areas Microsoft won't find Google easy to beat, even with Yahoo as a springboard.
Google had 59.2 percent share of searches in February, according to ComScore, compared with 9.6 percent for Microsoft.
The point: The online and offline advertising markets are increasingly complex. Watch points:
- Overall ad spending is slightly down.
- Online ad spending is the fastest-growing category.
- But the online category is only bigger than radio.
- Ad spending remains strong in the two largest categories, television and magazines.
- Local search advertising, where Google is strong, may pull more spending from other categories than display ads.
- Some analysts question the real value of display advertising.
Microsoft proposes spending $44.6 billion on Yahoo, as a springboard for reaching Google. The benefits still remain tenuous—or so I say—given the changing advertising market and the amount of product and services overlap between Microsoft and Yahoo.
Comments (12)
Hey Joe. I saw a commercial here on the SF Peninsula that was a honda commercial with the usual yada yada honda's great and then Yahoo slapped their Yahoo! search textbox on the screen and invited the view to "shop honda".
"Shop" here has to be a verb because if it returns hits like Google does, your going to be routed into repair land... not a good way to advertise your car.
So, hmmmm. "Shop" is a verb. How does one do a "verb" in search text? HA HA Next thing you know Yahoo will be turning their Yahoo! search textbox into a command line! Funny. Ironic, actually. Precisely where Microsoft started when they found they could build an operating system to host all kinds of applications. They started with a command line.
What applications will Yahoo! put on the web?
I think the whole result of this Microsoft "acquisition" of Yahoo is going to lead to Microsoft being called "Microwho?"
Posted by portuno | March 26, 2008 12:36 AM
Hey Steve! Did you think the dumbasses would just sit around and wait for you to save the day? BWAHHH HA HA HAAAAAAA
Posted by portuno | March 26, 2008 12:38 AM
Joe ,
Refer to : http://en.wikipedia.org/wiki/ComScore
A Harvard researcher alleges that there are a few cases where comScore software has been installed on users' computers without their knowledge. comScore admits it was in discussion with DollarRevenue, a company known for distributing spyware
You are as reliable as ComScore
Posted by Peter | March 26, 2008 11:29 AM
Interesting comment in PC Pro
Quote:"Ah yes, it's all XML so it will all just interoperate. But I'm told that one big reason for Microsoft chasing after Yahoo is its developer community, which, of course, has nothing to do with Microsoft development tools at all and wouldn't touch them with a barge pole. Clearly, I'm missing something important".
"Here's the bottom line: Microsoft thinks that acquiring Yahoo will be additive, like two plus two equalling four. Or, given its belief that it can integrate the companies effectively and get some enhanced value from the combination, perhaps two plus two will equal six. But the cold, hard reality is that Microsoft is going to empty the bank account for a deal in which two plus two is more likely to equal three, and then two point nine, two point eight, and so on... at which point, Microsoft's middle management will panic and attempt to Borg the entire mess and we'll end up with two plus two equalling one point nine.
A couple of years ago, I predicted that Microsoft would have retreated into its core marketplace of business desktop and server software by 2011. Do I see anything here to make me revise that prediction? Afraid not. On the contrary, it just makes it all the more likely. Go on, Redmond, prove me wrong."
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Posted by Marco | March 26, 2008 5:11 PM
@Marco,
"... end up with two plus two equalling one point nine."
Very good points, but I do think you are way too optimistic!
If Microsoft leaves Yahoo's infrastructure alone, they will advertise to the entire world that BSD Unix is a better data center platform than Windows and .NET. Won't much affect their vast desktop monopoly right away, but very well could hurt their attempts to create a similar data center monopoly. And with increasing inroads into *ix desktop usability (Apple OS/X on top of BSD, and Linux distros) combined with ever-growing cracks in their "Highly Reliable Times" message:
2 + 2 = 0.5
But if Microsoft tries to sweep away Yahoo's BSD infrastructure and replace it with Windows and .NET, Yahoo will collapse, proving to even the skeptics that Windows and .NET isn't ready for the huge-scale enterprise data center. Except that in addition to the $44B they wasted, they will pour even more tens of billions into making it work while the rest of the world moves on:
2 + 2 = 0.1
Or they could abandon this acquisition and get back to what they do best: Buy or bribe (oops, I mean lobby) governments to further grow their Windows desktop and Office monopoly from 95% to 100%:
2 + 0 = 2.4
Posted by Philosopher | March 26, 2008 5:43 PM
You say:
The majority of Internet users may suffer from what some analysts call "banner blindness."
I don't suffer from my banner blindness - I enjoy it :) This is the only way to surf the Web and stay sane.
Posted by anonymous | March 26, 2008 7:01 PM
Philosopher: It was not my comment but Pc Pro (although I agree completely with it)
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Another interesting comment:
Quote:Alex St. John:: "I've known Tim Sweeney a long time, and he makes a very important point. To be clear, PCs are fantastic gaming platforms, in spite of Intel and Microsoft. And they should absolutely be pinioned for the stupid stuff they've done to make the PC not as good a gaming platform as it would inherently be without their help screwing it up.
And so the shame of it is, the PC's a fantastic gaming platform, superior to anything anybody's every imagined, superior to every console, and Microsoft and Intel put crap in the PC that make it not so good. And so if you see a PC that is not denuded by things interfering with it by Microsoft and Intel, in many cases like an Intel crappy graphics chip, or a bloated Vista operating system, it's a fantastic gaming platform. And the shame is, if the low end of the PC market, the mass market PCs that everybody buys did not come with these crappy graphics chips on them and was not burdened with a fat OS, that the PC would be a larger contiguous gaming platform than all the next-generation consoles combined"
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Posted by Marco | March 26, 2008 8:32 PM
There's increased ad spending on the internet? Had no idea. That's what AdBlock Plus and filterset.g will do for you.
Posted by Adwords | March 27, 2008 11:42 AM
"The majority of Internet users may suffer from what some analysts call 'banner blindness'."
It isn't the user that suffers! It's not a disease or an affliction. It's deliberate. The reason analysts call it that is so that they can make it look good to the people paying for the advertising.
And this Yahoo thing is going to be another major screw up by MS, even worse than Vista. It's too bad that they have 70% of the computer users being 'blind' to their BS.
Posted by John Bowling | March 27, 2008 3:07 PM
You people don't know the kind of scaled-up bi-formetricated parrallel-enjointated incisored routines we plan to run once we own yahoo and take the cloud into full expansivifacted mode-logging! The resulting hit-share will exponentially expand beyond present metrics by a factor of 4 - 7 dependant on throughput capactic analogism for the day!
Posted by STEVE BALLMER | March 28, 2008 8:50 AM
We will launch net-words!
Posted by steveballmer | March 28, 2008 8:53 AM
Life after MSNHoo
Posted by msnhoo | April 10, 2008 5:22 AM