• by Laurie Sullivan  @lauriesullivan, October 8, 2008

Despite economic woes rattling nerves about ad budgets, experts expect search advertising and marketing to hold up well.

 

Steve Lagnado--controller at Didit.com, which manages 100 accounts, each spending between $50,000 and $2 million monthly--and Peter Hershberg--managing partner at Reprise Media, whose clients shell out about $100,000 per month in paid search--don't expect to see search budgets cut anytime soon.

In fact, both companies experienced between 3% and 7% growth in the third quarter this year. Percentages should continue to rise throughout 2008. "We have good visibility in the fourth quarter and see a fairly significant seasonal bump in November and December, about 10% to 15%," Hershberg said during a call hosted by Imran Khan, Internet/entertainment equity analyst at J.P. Morgan. "We have yet to see any material impact from the economy. Budgets haven't changed. If they do, they'll probably increase."

Both speakers cited the shift in customer ad spend from traditional marketing to search as the primary reason for this growth. They continue to see growth among large marketers. Lagnado has not had calls from nervous clients wanting to pull money out of search--but rather, consumer packaged goods (CPG), pharmaceutical and entertainment, which have historically spent next to nothing in search marketing, have begun to allocate more of their budget online.

"For whatever reason, we've seen a good amount of advertiser interest in YouTube--a lot of questions about the opportunities and how they can take advantage of the services," Lagnado said.

Aside from sharing insights on search engine marketing, Lagnado and Hershberg provided random thoughts about Google, Microsoft and Yahoo during Tuesday's call.

Not surprisingly, Google still dominates the landscape by holding the majority of search market share. Hershberg said Google gets more than 70% of the ad dollars that Reprise Media clients spend on search. Microsoft drives great conversion rates, but they need to produce more volume. And although the Redmond, Wash. company continues to take steps to make that happen, the overwhelming majority of the dollars continue to go with Google.

In April 2007, "Google garnered between 65% and 68% of the total search adverting spend we managed," Lagnado said. "They now have between 70% and 72%, but that's consistent for the past three to four quarters."

So, if Google and Yahoo merge, would the cost-per-click rise? Neither had a crystal ball to predict that answer, but another concern among advertisers has been the volume of data collected.

Both speakers acknowledge that advertisers have been more than willing to hand Google the majority of search marketing dollars, which gives it access to lots of data, although neither suggested the company would misuse it.

In an interview with Online Media Daily, Hershberg said Google captures information through a variety of services and tools, and it's certainly fair that people ask questions as to how any company-- not just Google--would have and use that much data at their disposal.