Mobile is Putting a Huge Dent in Desktop Search Advertising

It’s a story that’s been repeating itself over and over during the last few years – desktop search advertising is shrinking.

The reason is simply that advertisers are now following consumers to where they spend the most time, on their mobile phones. As mobile search advertising increases, desktop continues to shrink. Considering that the cost of a mobile ad is about one third of the cost for desktop, search giants like Google face a growing financial risk the more that desktop ad spending declines.

According to estimates from eMarketer, overall spending on desktop will drop approximately $1.4 billion this year, a 9.4% decrease from 2012, while mobile increases by 82% to approximately $4.07 billion.

Even as Google continues to describe mobile search as an “additional search activity” that “isn’t taking away from the time that people spend searching on their desktop computers,” the numbers tell a different story. Their ad revenues from desktop search are predicted to decrease $770 million this year while their mobile ad revenues increase by approximately $1.76 billion.

What’s even more amazing is the incredibly short time that it took for the gap to close. Google has a 95% market share in mobile search and it will likely account for 1/3 of their total search revenue in 2014 according to StatCounter.

Google, of course, has since combined its desktop and mobile and departments into one, in an effort to rethink mobile advertising from the ground up. They now sell both ad types as a single package and have introduced new tools to help advertisers solve the problem of tracking mobile advertising’s effectiveness.

On a recent conference call Nikesh Agora, Google’s chief business officer said that “The fundamental tenet is not to speak about mobile, mobile, mobile… People aren’t distinguishing what they’re doing on different screens, so advertisers should be more agnostic about where they reach the user.”

 

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