Ad spending moving from portals to search, entertainment sites

Avenue A/Razorfish releases annual report on spending habits of online advertisers that explains why portals like Yahoo, Microsoft, and AOL boosted their search efforts and purchased ad networks last year.

For online advertising, the word is that portals are out, but search, entertainment, and social network sites are in.

Avenue A/Razorfish
That's according to a report released on Sunday by Avenue A/Razorfish, the ad agency part of online advertising firm Aquantive, which Microsoft acquired last year.

During 2007 total online ad spending through Avenue A/Razorfish was $735 million, up 36 percent from the year before, and the number of Web sites on which ads were placed doubled to more than 1,800, according to the "2008 Digital Outlook Report."

The share spent on portals dropped from 24 percent in 2006 to 19 percent, while search share rose to 31 percent from 28 percent, vertical sites rose to 39 percent from 37 percent, and spending on ad networks was flat at 11 percent. More dollars went to the top five ad networks.

"This endorses the strategy of the portals to buy ad networks" and beef up their paid search efforts, Jeff Lanctot, senior vice president of media at Avenue A/Razorfish, said in an interview.

Microsoft's new AdCenter and Yahoo's Panama are aimed squarely at reducing Google's dominance in the paid search market. Meanwhile, the major portals also recently acquired ad networks: Microsoft's acquired DrivePM as part of its Aquantive purchase, Yahoo bought Right Media and Blue Lithium, and AOL purchased Tacoda and Quigo.

Asked about what effect a recession would have on online ad spending, Lanctot was fairly optimistic. "If there is a widespread recession, all advertisers will be impacted, but digital is more insulated than other channels" because of the accountability it offers--the ability to track its effectiveness better than other types of advertising, he said.

However, search might not be as well shielded, because even if marketers keep placing ads, searchers will be cutting back on their online shopping to try to save money, Lanctot said.

 

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