Search Ads Beating Displays, According to NY Times

The New York Times yesterday reported how contextual search advertising is beating out more expensive display advertising on the web, a reality that’s yet more bad news for traditional media sources that are aggressively selling display inventory to try and replace lost revenue from flagging subscription sales.

While cautioning about losses and mixed-results among major web portals such as AOL, Yahoo, and the NYT themselves, the good news is that overall the market looks promising as agencies move budget from traditional media to online media in general. Even more promising is the outlook for Google, who continues to see revenue from search ads skyrocket.

Why do pay per click ads beat out display ads?

It’s all about relevance. Typically, display ads on sites are only generally related to the content on the page, and often can be really off base (in the case of many newspapers which sell inventory based on demographic rather than content of the area of the site). This practice may be profitable for the site in question, but misses a fundamental truth of the internet — people tend to already know what they’re looking for when they go to the web.

True, there are plenty of straight-up web surfers out there, but even they tend to surf based on topics or themes, on sites they are already familiar with, and only check out ads when they seem laser-targeted with their interests in mind.

There’s big money in getting to know what’s in that searchers mind (as the Facebook deal is testament to). But until display advertising gets there, expect to see more lackluster statistics and growing skepticism.

Long live organic search, eh?