$12.9 Billion spending in Pay-Per-Click market
eMarketer projections are predicting that U.S. Internet advertising spending will pass the $10 billion mark for the the first time in 2005. In fact, they are estimating the total spend at about $12.9 billion.
Web-Kare, in case you’re not familiar with us, specializes in the industrial and business-to-business market. Our clients have experienced a sharp increase in ad spends this past year. The actual cost-per-click, which was normally well under $1 for most of our clients, now hoovers around $2 +, with a few clients paying in excess of $5. All well and good if your product is capital equipment - not so good if you’re pitching smaller items with an average invoice of only a few hundred dollars.
eMarketer has explained the expected growth as larger ad budgets overall as well as shifts from traditional ad spending to online ad budgets. Perhaps, but which came first, the higher ad budget or the higher cost-per-click? In the case of most of our clients, it was the higher cost-per-click - driven by more competitors joining the PPC bandwagon.
What’s disturbing about the trend is that eMarketer Senior Analyst, David Hallerman, reports that consumer spending has not kept up with the ad spend increase. According to him (and this includes all demographics and not just industrial) ad spending rose 32.5 percent in 2004, while spending per user only rose 27.9 percent. (I have not found any figures specific to industrial spending.)
What does this mean for Web-Kare clients? It means that we must be careful with ad budgets, research keyword terms frequently, and shoot for the absolute best return-on-investment for our clients. Basically, it means more time spent managing our clients’ PPC programs.
September 19th, 2005 Edit