Online Advertisement Industry 2011: CPC To Decrease But CTR Will Compensate

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Online advertising market is growing at a rapid pace. In last few years numbers of online advertisers have increased by an exponential rate. Taking the view of the appreciation in online advertisement expenditures, a recent study was conducted which highlights that Social media titan Facebook accounts for near about 2.37 percent of the total advertising expenditure during fourth quarter of 2011. It’s also been expected that Facebook will account for 5% of the total online advertising expenditures by 2012.

Study enlightens that the ‘like growth’ of brands on Facebook has increased by 9 percent in 2011 and is expected that brands’ overall like will be double by the end of 2012. This directly points out that Facebook is continuously proving itself as the best online platform for brand promotions. Therefore, we may see sharp increment in brand pages over Facebook in 2012 and majority of local brands have not adopted the usability and advantages of Facebook still.

“Our analysis of Facebook performance was based on data from both the Efficient Frontier and Context Optional platforms. A client index representing over 15 advertisers and 20 million fans from a multitude of verticals including retail, entertainment, CPG (consumer packaged goods), and finance was built from a subset of advertisers, brands, and fans managed through the platforms. Advertiser and user behavior was then analyzed for three-quarters beginning with the first quarter of 2011”, as said by Efficient Frontier.

However, Search is the primary tool for advertisers to place their bet to advertise and online promotion. With 14% year-on-year growth in U.S., search spend has become the primarily source for income, especially for Google which consumes 97% of its revenue from online advertisement. It has been expected that Google will control 9.7% of global advertisement market in 2012.

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While search spend increased significantly in Q4 2011, Cost Per Click (CPC) has been decreased by 5%, mainly due to rise in mobile apps and mobile usage for online affairs. The cost of CPC on mobile devices is comparatively lower and this has triggered the need of more efficient ad networks to improve CTR ( Click Through Rate) among search engines like Google, Yahoo or Bing which run their own ad network like DoubleClick.

Undoubtedly, Google again led the way with 80% spend share in Q4 of 2011. Interestingly, Tablets are becoming the prime source of revenue from mobile devices which accounts for 50% clicks as well as search share.

The future looks promising for Digital Ad industry as Facebook is expected to account for 5% of online advertisement expenditure. Mobile search spend will contribute 16% – 22% of all paid clicks by end of 2012. The share may increase as Tablet market is expected to grow with the launch of new devices with reduced price tag.

The global search spend is expected to grow by 15% – 20% by end of 2012. However, the CPC will continue to fall but will be compensated by improved CTR. Yahoo/Bing search ad will emerge as most responsive ad inventory along while Facebook will continue to enjoy its dominance in social media ad industry.

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