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Ad Bellwether: We’ve Reached The Bottom, But Search Will Keep Falling

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It’s been the star performer in an online advertising market that has itself flattened lately – but now spend search advertising is also expected to fall back.

Marketers polled for the Institute of Practitioners in Advertising’s Q2 Bellwether say they will cut search spend by five percent. That’s a smaller cut than has affected older media in recent months, but search is also the only medium now expecting an increasing rate of decline, FT.com says

Across the board, the number of companies cutting their ad spend has fallen from 49 percent in Q408 to 45 percent in Q109 to 38 percent this time around. IPA president Rory Sutherland, in the release: “To anyone optimistically inclined, the April Bellwether seemed to signal the bottom of the market, and the new report suggests that the worst is over.”

While there’s a glut of cheap online display inventory, search advertising has been seen as a continued driver thanks to relevance of ads contextual to content. June IAB figures showed paid search accounted for 59.3 percent (£1.98 billion) of all online ad spend in 2008, with classifieds on 21.4 percent (£715.2 million) and display at 19 percent (£637.4 million).

News of the imminent cutback will worry Google (NSDQ: GOOG), which has pioneered the paid search model, on which it largely relies.