Search marketing will continue to attract growing ad budgets from now until 2011, but its share of total online ad spending will slowly decline during that time from 40% in 2006 to 32% in 2011 due to the rise of Internet video advertising, according to a report from research firm International Data Corp.
The forecast says that search advertising will continue to attract more online spending than any other ad format in the next four years. But slower growth and the advance of fast broadband connections will make for a challenging environment for companies heavily reliant on search marketing for their revenue. Google receives about 99% of its income from sponsored search.
“This will create tremendous opportunities, but also threats, for old and new media companies,” said Karsten Weide, program director at IDC, in a statement. “At the same time, search advertising will lose market share, which may pose a strategic challenge for Google, the Internet advertising market leader.
IDC predicts spending on Internet advertising of all types in the U.S. will grow about three times as fast as ad spending overall in the next five years. Total online ad spending will increase from $16.9 billion in 2006 to $31.3 billion in 2011, at a compound annual growth rate of 13.5%