YNOT – The picture for online ad sales seems to be growing brighter, and the NY Times is reporting that display ad revenue for a variety of online advertising sources is once again on the rise. That doesn’t mean good times are here for signature news sites like NYTimes.com, however, which are still suffering from revenue drops caused by the decimation of classified ad revenue.Still, it seems like most of the news for Internet ad brokers is good news. Earlier this month, Google reported third quarter earnings that beat Wall Street expectations. That prompted Google chief executive Eric Schmidt to declare the recession over and to proclaim the company’s commitment to investing “heavily” in growth.
“Google had a strong quarter — we saw 7% year-over-year revenue growth despite the tough economic conditions,” said Schmidt. “While there is a lot of uncertainty about the pace of economic recovery, we believe the worst of the recession is behind us and now feel confident about investing heavily in our future.”
Of course he did deliver that statement to investors on a conference call, but there seems to be plenty of data to back up Schmidt’s assertions. First, more consumers are clicking on paid ads at Google. Paid clicks rose 4% over the second quarter numbers, and a healthy 14% over third quarter clicks last year. Google also reported an increase of 5% over the previous quarter in what advertisers were willing to pay for clicks; that number is still down slightly from the third quarter last year, but Google says that’s a result of currency fluctuations more than anything else.
The results were less dramatic at Yahoo.com, which observers know is battling not only the effects of the recession but also an identity problem that has caused it to lose search market share to Google on a steady basis. Still, display ad revenue for Yahoo.com was up 2% from the previous quarter.
“Ad spending is starting to free up, and we are a great value proposition for advertisers,” said Tim Morse, a Chief Financial Officer at Yahoo.
Display ads are being watched carefully by economists because they represent an entirely different kind of ad buy than search ads. Since display ads are harder to measure in terms of immediate results, they are still valued by aggressive companies looking to make a splash with high visibility placement.
Market research firm eMarketer said it expects growth in display ads to reach 5.9% next year as companies come out of recession mode and start to invest again in growth.
The New York Times also reported positive news for Internet advertising in general.
“Over all, the Internet is the only advertising medium expected to grow this year in the United States, rising 9.2 percent, to $54.1 billion,” the NY Times reported, citing figures provided by media service firm Zenith Optimedia.
But the Times is also reporting that signature news websites like nytimes.com, cnn.com and others are not seeing the same increase in ad revenue that is being felt by other Internet websites. The reason, they say, is the high cost of ads on these elite sites; advertisers are using these websites to make initial high profile product launches, then moving ad dollars to smaller sites through buys on ad networks.
Although the large media sites have more views than most of their competitors, advertisers are finding ways to divide up their buys over multiple sites to achieve the same exposure for a fraction of the cost.
“You get the big audience reach on your national brands, and you guarantee that by buying USA Today or The Times or other properties. And a secondary buy, you buy inexpensive, low-c.p.m. ad networks,” said Chris Saridakis, senior vice president and chief digital officer at Gannett, which owns USA Today. “They’re basically trying to buy the same audience at a third of the price.”
