The year 2009 has been another good one for Google – the top-80 U.S. retailers spent an estimated $264 million in online advertising with Google during Q4 2009 alone. According to AdGooRoo, this is an increase of 12.5% from to Q3.
In general, U.S. online-advertising spending rose from the start of November 2009 through Christmas Eve to $27.12 billion even though individuals spent slightly less than they did last year. Still, it’s a growth of 5%. Although all retailers were up, several stood out — especially the traditional retailers (“bricks”). This is understandable since about 78% of people research something online before making a purchase. But, online retailers (“clicks”) were also strong. Retailers told Google that they have begun to see a surge in online searches impacting offline sales (and vice-versa). This means that retailers need to have integrated offline and online campaigns. If the study commissioned by eBay in the U.K. applies worldwide, Internet-related spending will account for 20% of retail spending. This, of course, is excellent news for online advertisers — and Google is very much aware of this. During Google’s Q4 earnings call, the search-engine discussed the aggressive, retail-ad spending that occurred in Q4 and how it received new investment by some of the world’s largest brands.
In 2009, Google also introduced its hosted commerce-search, an aggressive move in the retail space. Focusing on a handful of popular sites, the technology brings up a second search-box for a search-within-a-search. This enables visitors to search within a given domain automatically. With commerce search, Google is playing into “conversion rates” when advertising the product for retailers. The reason it clear – the average online-retailer conversion rate is just three percent. Google aims to increase the rate five to ten times, using a powerful search technology for what it calls “ultra-fast speed and accuracy.” As the New York Times pointed out, analysts like it for saving time and effort, but web publishers and retailers were not amused Google displaying ads from their competitors in the secondary search.
Google perceives 2010 as the year of YouTube advertising. Google acquired YouTube in 2006 for $1.65 billion. If successful, it would be the first year that the acquisition would turn a profit. Google CEO Eric Schmidt foresees the adoption of major advertisers in YouTube as a component of ad campaigns. “Nowadays, just about every advertising campaign involves YouTube as part of the solution. That’s a big deal,” he said. Google also hopes to improve its market position by focusing on a convergence of mobile search along with advertising and applications including location-based technologies that include a heavy dose of social networking.
With the pending Bing-Yahoo search deal in the works, 2010 will be an interesting year for online advertising.