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Google Needs A New Game Plan as Display Ad Spending Overtakes Search

Omar Akhtar
Google World Headquarters

Reports on the death of search advertising are widely exaggerated. But that doesn’t mean Google shouldn’t be worried.

Last week, an eMarketer report predicted that 2016 would be the first time spending on search advertising would be overtaken by spending on display ads. However, ‘display’ is a broad category in the report, which basically represents everything ‘not search.’ It lumps together banners, native, social , rich media, video and sponsorships under a single ‘display’ category. That’s an important distinction for those of us who take display advertising to really just mean ‘banners.’

195251The bottom line is search advertising isn’t what it used to be, and its slice of the advertising pie is being divvied up amongst other platforms. Marketers are now aware that they can generate their own SEO through producing original content, which is not only likely to get discovered as a regular, unpaid Google search result, it’s also likely to be more engaging than a text ad.

More than anything, this trend is a big indicator of where consumers are spending their time. As eMarketer says in its blog post on the report, “numbers like these reveal a vibrant market in which consumer-led media habits (particularly increases in video consumption and mobile device usage) are funneling display ad dollars to the most desired channels and formats.”

In addition to mobile, consumers are discovering products and brands that are more relevant to them through targeted social media ads. Customer-review sites such as Yelp do a better job of providing local information on stores and services, and Amazon is slowly becoming the first place you go to search for a particular product, instead of typing it out on Google.

All of this is not to say that search is going away anytime soon. “There’s no doubt that in particular with the increase of consumers on social networks and phones, they’re going to spend less time on search,” says David Rodnitzky, CEO of the digital marketing agency 3Q Digital. “Search is going to continue to grow, but much more slowly.”

Although Google and Facebook have been battling it out on many fronts, Rodnitzky says Facebook is more of a complementary platform when it comes to advertising. “Search is a demand fulfillment platform, people always use it when they want to buy a product or a service, and that’s not what people use Facebook for.” Rodnitzy says. “Unless Facebook builds a search engine that becomes so great that it displaces search on Google, Facebook and Google are going to exist together.”

While Google might not be too worried about a Facebook search engine, it should be wary of competition from two other Facebook products, namely Instagram and Video.

Instagram is poised to become an advertising juggernaut. Its ad engagement rates are off the charts, and eMarketer predicts that its display advertising revenues will overtake Google’s within the next two years. And Facebook Video is coming after YouTube in a big way, consistently posting high views, better engagement rates and more targeting options for advertisers.

To be fair, Google isn’t just sitting on its hands. It has recognized the need to strengthen the other parts of its advertising portfolio, while continuing to innovate in search so that the clicks keep coming. Google is investing heavily in improving its mobile ads, making them more graphical and interactive. And it continues to take on Amazon on the product search front with the ever improving Google Shopping. But for advertisers setting their budgets for 2016 and beyond, it’s worth taking a second look to see if the number they’re spending on Google search needs some revising.