Paid Search fastest growing ad medium! (But don’t forget Online Display.)

Media research firm Kantar Media estimates that Paid Search advertising grew a whopping 7% in first quarter of 2015 compared to the same period last year. That growth rate surpassed all other paid media categories monitored by Kantar, making Paid Search the fastest growing medium for 1Q2015. And while Kantar’s reporting covers nearly all major media, we find the most interesting comparison within the digital media category itself. In contrast to Paid Search’s 7% growth spurt, Online Display Advertising suffered an 8.7% decline for the first quarter. Let’s take a look.

The growth in Paid Search makes sense. When people use Google, Bing or Yahoo, they are proactively digging for information. They have a goal. So when a Google text ad that’s right on point appears adjacent to their organic search results, they click. Search advertising works. Led by automotive, financial services, media and retail advertisers, Paid Search has proven its effectiveness. The proof shows up as 7% growth in 1Q2015.

It’s important to note that Kantar’s research tracked desktop advertising only for both Search and Online Display. Their study did not monitor mobile advertising. Had mobile been included, Paid Search growth numbers may have been even higher.

But what’s the story with Online Display advertising? Despite the year-over-year first quarter decline, we believe that Online Display continues to evolve and, along with the rapid growth of mobile, will remain a powerful online advertising channel. Here’s why:

  1. Mobile usage is growing rapidly. According to the Cisco Visual Networking Index, global mobile data traffic grew 69% and average smart phone usage grew 45% in 2014. This trend will continue aggressively, ultimately increasing display ad opportunities on the mobile channel.
  2. The Internet overall will continue to be the “go to” place for finding customers. PriceWaterhouseCoopers forecasts steady growth in total online advertising revenues through 2018. Display ads will remain a substantial slice of the online advertising pie with modest spending increases projected for each year.
  3. The PriceWatehouseCoopers report also projects that mobile ad spend will move ahead of desktop display for the first time in 2016. Together, mobile and display will account for nearly 50% of total online advertising revenue by 2018.
  4. Technology advancements – more so than ad format and content – have captured the attention of online advertisers and media buyers for the past couple of years. The focus has been on programmatic online ad buying methodologies and Real Time Buying (RTB) auctions. Technology will continue to make the online ad buying process smoother and arguably more efficient.
  5. As marketers re-focus on the creative aspects of online advertising – innovative display formats, message development, and contextual targeting and placement – the effectiveness of Online Display will improve.

Online Display advertising operates in a much different environment than Paid Search. A person’s engagement with web page content is actually more similar to the experience of reading a magazine. It is reasonable to consider that online display ads can function much like traditional magazine ads as well. Having the right message in the right place – content and context – is critical for ad readership and click-through. Smart advertisers will focus on creating better online display ads and placing them more effectively. As their results improve, their online advertising investment may increase as well.

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