• by Laurie Sullivan , January 7, 2009

Despite analysts' focus on the bleak news that 2009 will become the first year that U.S. search advertising growth slows below 20% annually, all estimates predict an uptick at a slow and steady rate. An eMarketer report released Tuesday suggests a not-so-grim future for U.S. online search advertising. Marketers, in fact, will rely more on search marketing as many become cautious about spending and look for methods to prove that campaigns work.

The ability to track back performance will send more marketing dollars into search than any other form of advertising media, according to David Hallerman, senior analyst at eMarketer. "Nobody ever got fired for choosing IBM," he said, taking a phrase from the 1970s and 1980s. "Today's IBM is Google."

Hallerman predicts that U.S. search ad spending growth will slow to 14.9% in 2009, compared with 21.4% in 2008, and 29.5% in 2007. Companies will spend $12.3 billion on search advertising in the U.S. this year. That jumps to $13.9 in 2010, $15.6 in 2011, $17.7 in 2012, and $19.5 in 2013. A stronger economic recovery, the election and the Olympics should feed a recovery in four years.

Search advertising will remain the prime recipient of online ad dollars, with spending more than double that of display ads through 2013. Estimates from eMarketer show continued dominance for search relative to other online ad formats. Other methods that get more media scrutiny today, such as online video ads, have a meager share compared with search.

Factors supporting search spending through the recession will become analytics that track clicks and attract advertisers looking to shield their smaller budgets. Companies also will look for ways to support Web site traffic, improve direct-response marketing strategies, increase branding campaigns and find the consumers who seek bargains.

Although the poor economic climate bears the brunt of the burden on the slowdown, a maturing ad industry will contribute somewhat to the pain. Hallerman expects relatively flat--about $1.5 billion--additional dollars entering the U.S. search advertising market this year and next.

A reduction in display ad spending also can ambush search spending. Since display ads help feed both search queries and clicks, fewer display placements could result in fewer successful search-based sales, according to Hallerman. "If companies decide to cut the display ads, even if they try to maintain the search campaigns, they may find fewer searches because search campaigns play off display ads, according to studies from Microsoft and Epsilon, which support this theory," he said. "Companies shouldn't cut the display campaigns as deeply as they plan because display ads contribute to making people aware of the product or the service sold."

Even if a company needs to slash ad spending, its Web site will require support to maintain an online presence. Hallerman said search is an essential tool for driving traffic to the company's site--with showing up in a search query becoming as vital as having the site in the first place. In that light, search marketing--both paid ads and search engine optimization (SEO)--is a fixed cost of doing business. This connection between consumers and company can become a factor to sustain search spending, he said.