"A Drop in Search Engine Ad Supply"

demand to far outstrip available keyword spots

[amznVibe]

The New York Times has an article [216.239.37.104] covering a Nielsen/Netratings report [64.233.161.104] (original PDF [nielsen-netratings.com]) that talks about how the demand for advertising on search-engines (Adwords, Overture, etc.) is growing far more quickly than the supply of advertising spots available.

What this probably is leading to, is that popular keywords will rise in price until even the largest of advertisers balk at the cost. What alternatives will the demanding advertisers turn to in such a situation?

Although figures for last year are not yet available, Mr. Cassar said the most conservative estimates predict that they will show spending increases of 45 percent. The trend, Mr. Cassar said, will ultimately result in advertising prices high enough to keep some marketers from spending on some search terms. Even now, the tightening supply of the most sought-after advertising space has caused some companies to bail out of bidding wars for some phrases.

[CernyM]

What this probably is leading to, is that popular keywords will rise in price until even the largest of advertisers balk at the cost.

As long as its the advertisers who are setting the prices on ads, that can't happen.

The most efficient companies will continue to thrive on PPC.

[amznVibe]

There are all kinds of classes of advertisers. The little guy and the big guy. The ones who do alot of research and spend thriftily and the ones that just throw alot of money at it because they can. It's the latter that can cause the most damage and they are growing in number.

[blaze]

Unlikely this will be a serious problem.

Search engines are about returning results that people are looking for. As soon as they stop doing that, people will simply find other search engines to use.

[zulufox]

Cerny is right, I fail to see how the price will get too high for advertisiers if it is the advertisers that are setting the prices... atleast on adsense anyway.

It might get too high for the little guy... but not for all advertisers