It turns out that display advertising on the internet is becoming less popular with most marketers. They are turning to search text ads instead. This is probably not news to anyone in the industry, but now there is fairly solid research on the trend.
According to The Wall Street Journal, "Search ads are forecast to represent 42% of overall U.S. online ad spending in 2008, according to eMarketer, up from 40% in 2007. Display is expected to stay flat, at about 21% of overall spending."
The news is clearly bad for Yahoo! (YHOO), AOL, and Microsoft (MSFT) which get a very large portion of revenue from display advertising. As the big companies in the display industry, they at least will continue to keep most of the revenue from a faltering market.
The firm’s that are likely to be scuttled by the trend are newspapers. They are relying on the online versions of their products to replace the falling revenue from their print products. That evolution is moving slowly. Print dollars are simply falling off too quickly.
Now comes the data that display revenue is not growing quickly. Newspaper websites have put their hopes on a better trend to survive.
It won’t happen.
Douglas A. McIntyre
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