U.S. online ad spending reached $32.03 billion last year. And this year, marketers are expected to boost that level to $39.5 billion. That amount puts online at 23.3% of the expected $169.48 billion U.S. ad market in 2012. Both large and small advertisers are likely to spend some of their ad dollars with either Google, Facebook or both companies. The latest public filings from these firms show how they are securing higher amounts of advertiser budgets.
Of Google’s $37.9 billion in 2011 revenue, 96% came from advertising. In addition, 46% of the firm’s revenue was generated through U.S. activity. Based on these numbers, $16.74 billion of the U.S. online market, or 52% is controlled by Google.
Google makes its money in both the search and display market. The top industries that spent money with Google in 2011 appear below. The top keywords and cost per click appear in parens:
- Finance and insurance: $4 billion (self-employed health insurance $43.39; cheap car insurance $33.97)
- Retail/general merchandise: $2.8 billion (zumba dance dvd $5.18; preform treadmill $3.80)
- Travel & tourism $2.4 billion (new York hotels $7.68; plane tickets $6.95)
- Jobs & education $2.2 billion (accredited online college degrees $34.87; online nursing degree $18.11)
- Home & garden $2.1 billion (home air conditioners $8.67; replacement windows cost $8.03)
- Computers & consumer electronics $2.0 billion (online video conferencing software $35.53; ink cartridges discount $26.79)
- Vehicles $2.0 billion (cheap hybrid cars $15.57; certified used cars $8.54)
- Internet & telecom $1.7 billion (high speed internet deals $26.74; pre-paid cell phones $25.38)
- Business & industrial $1.6 billion (custom business cards $13.83; cheap office supplies $10.28)
- Occasions & gifts $1.2 billion (funeral flowers arrangements $20.95; flower delivery $3.88)
Google plans to expand its efforts in the local and mobile search and display sectors in 2012 and the company has its eye on social networking. However, analysts believe that the company will dominate in search, especially for marketers who use pay per click campaigns for the follows:
- Products and services that are difficult to find (those that were once found in the traditional yellow pages)
- Higher margins and longer customer lifetime values
Another leading playing in online advertising, Facebook, recently confirmed that its 2011 revenue of $3.7 billion was largely comprised of display ad revenue, except for the 12% linked to its Zynga subsidiary. The firm’s ad revenue from the U.S. is 56% or about $1.5 billion.
Facebook touted its reach on both a national and local level by highlighting 2 ad campaigns in its recent S‑1 filing with the SEC. The company worked with Procter & Gamble to reach a young female audience with a campaign called “Mean Stinks.” The goal of the campaign, which featured a girl apologizing for bullying others, was to increase sales of its deodorant Secret. The campaign ran for 26 weeks and company officials say product sales rose 9% as a result. On a local level, Facebook worked with a wedding photography business in Minneapolis. The business wanted to reach ‘engaged’ women between the ages of 24 to 30 who lived in the local market. By spending only $600, the business said it realized a ‘significant increase’ in business.
The information provided by these tech giants provides insight into the online ad market for 2012. With the low cost advertising models and the huge effort that Google and Facebook make to lure advertisers as they compete with each other and other media space providers, it’s easy to see that many business operators, both small and large, will experiment with mobile and social media marketing this year.[Sources: Kim, Larry. Breaking Down Google’s 2011 Revenues. Wordstream.com. 23 Jan. 2012. Web. 6 Feb. 2012; United States. Securities and Exchange Commission. Google: 10‑K. Edgar Online. 2011. Web. 6 Feb. 2012; United States. Securities and Exchange Commission. Facebook: S‑1. Edgar Online. 2011. Web. 6 Feb. 2012]