Are Advertisers Spending Too Much on Search Ads?

Posted by: Rob Hof on June 11, 2007

Yes, according to a new study (soon to be posted here) by Atlas, the digital marketing technology unit of aQuantive, which was just bought by Microsoft for $6 billion.

The study, conducted by Atlas’ R&D arm, Atlas Institute, analyzed 16 advertisers in the first quarter of this year, tracking users who bought something, provided a sales lead, or registered after viewing their ads. What it found was essentially that consumers reached by multiple ads on multiple sites ended up converting into customers or leads twice as often as those reached only on a single site.

The upshot, according to Young-Bean Song, vice-president of analytics at Atlas Institute, is that the convention of attributing conversion to the last ad in the chain that the customer viewed is broken. And since that last ad increasingly is a search ad, Google and other search sites are getting the lion’s share of new spending on online ads, even though—according to Atlas’ study—banner ads clearly deserve credit for turning browsers into buyers. “Searching advertising is getting more credit than it deserves,” says Song.

If the study results are valid, and if advertisers decide to act on them by shifting some of their spending from search ads back to banner ads, Google potentially could a splash of cold water.

Those are big ifs, though. Atlas released a study in the same vein last July, but clearly that hasn’t slowed search advertising down. Search ads are still seen as far more measurable in terms of their impact than banner ads. So whether this one will sway advertisers remains up in the air.

Come to think of it, though, the study results suggest yet another reason why Google’s branching out into display ads with its DoubleClick deal and into radio and TV ads as well. If the study’s right, Google no doubt has already found the same thing in its own data, and wants to be in a position to profit from any shift in advertising spend.

More from Clickz.

Reader Comments

Josh Gordon

June 15, 2007 7:02 AM

Google is coming up on the radar of Media sales people everywhere. Google has become the great sucking sound of marketing dollars being siphoned away from traditional media who assume they don't compete with Google because they are not in the search business. Wrong! When marketing dollars to promote a web initiative/site goes to Google they don't get spent elsewhere. I work with many print publishers who struggle to launch online products who are surprised to find no ad dollars waiting for their launch. Google is very good at what they do and has an easy to access and evaluate dollars for click formula. Do advertisers spend too much on Google? Yes, but only because many media they compete with don't eevn know they have competition!

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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