B2B Web Strategy Blog - eMagine

Microsoft’s Yahoo Bid Reveals Confidence in Online Spending Growth

February 13th, 2008 Posted by: Bill Gadless

Of course, it’s great sport to debate the strategy behind Microsoft’s proposed mega-gamble on Yahoo, and whether it might actually pan out. What’s clearly not debatable, though, is that Microsoft’s 40+ billion chips on the table represent a stunning affirmation of the probable future growth of online advertising …especially since we can be certain that some pretty sharp pencils were being wielded in Redmond.

Industry experts weigh in
eMagine wasn’t at all surprised at this view of online’s likely growth. Neither were the leading industry analysts and observers interviewed by the folks at msnbc.com for their worthwhile article on this transaction, “Online advertising spending will keep growing”. Here are some of their more revealing comments…
Jarvis Coffin, chief executive of advertising distributor Burst Media Corp.: “Forty-four billion dollars is a great testimonial to the great power of this marketplace. The market is saying, ‘I don’t think we’re in a bubble. We’re in a period of intense growth that’s going to continue to grow for more years.’”
Daniel Taylor, senior analyst at the Yankee Group: “Let’s assume a worst-case scenario, a decline in the number of advertisers. They are willing to spend more because they are getting better responses. Revenue in the (online) industry is still likely going to go up.”
Bob Davis, managing general partner of Highland Capital Partners: “You could argue whether or not Microsoft is putting too much hope into Yahoo. I don’t think you can put too much hope into whether there’s too much in online advertising. We can debate and postulate about how fast it will grow, but it will grow.”

Why isn’t this forecast surprising?
Online’s low relative share: The Interactive Advertising Bureau says that U.S. online ad spending grew about 25% through the first three quarters of last year, compared with the same period in 2006. Analysts see room for much more growth, considering that the Internet accounts for less than 10 percent of all U.S. ad spending, but more than 20 percent of the time Americans spend consuming media. Conversely, the share of ad spending on print media exceeds their consumption time (Elias Plishner, senior vice president for digital communications at Universal McCann) …an imbalance that simply can’t persist, and is already shifting.
Performance and metrics: Web advertising offers more and better tracking tools than other media, and technical improvements are leading to ever-better targeting. And with PPC in particular, there are the advantages of pay for result (vs. “impressions”), control, flexibility, and ease of setup. (Of course, we’ve blogged about all this before; see B2B Online Marketing Budgets Set to Rise Again in 2008 and Are You Missing One of the Best Deals in Marketing?)

Assuming this deal gets done, what should you be doing now?
We don’t see a need for anything beyond watchful waiting, at this point; certainly Google’s preeminence in search and PPC advertising isn’t about to vaporize overnight …if ever. What you’re likely to see is the evolution of a richer set of offerings from all the players in response to stronger competition. As these become ready for prime time for B2Bs, eMagine will bring them to your attention in these e-pages.

Meanwhile… if you aren’t yet using online advertising, you really should be. If you are, but aren’t sure you’re getting optimal results, your Web marketing consultants are there to help.

Entry Filed under: B2B Web Strategy, Internet Marketing, PPC, Search Engine Marketing