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Online Ad Spending Up, PPC Down

Posted on 2.05.2007

According to Outsell's "Annual Ad Spending Study 2007" report, advertisers project to increase their online ad spending by 17.9% this year, including a 39% increase in search engine advertising.

The bad news for some is that pay-per-click (PPC) online ad spending is expected to drop by 1%, due to concerns over click fraud. The survey states that 49% of advertisers will reduce their PPC spending because of fraud concerns - up from 36% in spring 2006.

But click fraud may not be the only reason PPC is on the decline. Many pundits believe that the market is becoming saturated with PPC ads - in particular contextual advertising and the Adwords/Adsense combination. As users become more Web savvy they develop a certain immunity - ignoring the ads that they see on every search page multiple times per day. In addition, the cost for small businesses is rising. As the larger corporations (with more to spend regardless of a lower ROI) buy more and more keywords, PPC costs rise for the little guys. According to DoubleClick Inc., the price per click is up by an average of 31% from a year ago. Of course, as Google's recent earnings release implies, PPC is not going anywhere and Google is doing just fine. But, it's a safe bet to say that the deep-pocket advertisers are helping Google significantly. For the small businesses, the rising costs of PPC campaigns is a strong argument for focusing on SEO and optimized landing pages for more natural site "discovery" which can lead to a better conversion rate, while using PPC sparingly as a supplement.

Be sure to read Website Magazine's upcoming issue for SEO tactics and tips. As always, subscriptions are free, so be sure that you are subscribed today.

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