Top of the class for online ads? Search and social networks

For online advertising, the word is portals are out but search, entertainment and social network sites are in.

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That's according to a report released by Avenue A/Razorfish, the ad agency part of online advertising firm aQuantive, which Microsoft acquired last year.

During 2007, total online ad spending through Avenue A/Razorfish was $735m, up 36 per cent from the year before, and the number of websites ads were placed on doubled to more than 1,800, according to the 2008 Digital Outlook Report.

The share spent on portals dropped from 24 per cent in 2006 to 19 per cent, while search share rose to 31 per cent from 28 per cent. Vertical sites rose to 39 per cent from 37 per cent, and spending on ad networks was flat at 11 per cent.

Jeff Lanctot, senior vice president of media at Avenue A/Razorfish, said: "This endorses the strategy of the portals to buy ad networks" and beef up their paid search efforts.

Microsoft's new AdCenter and Yahoo!'s Panama are aimed squarely at reducing Google's dominance in the paid search market. Meanwhile, the major portals also recently acquired ad networks: Microsoft acquired DrivePM as part of its aQuantive purchase, Yahoo! bought Right Media and Blue Lithium, and AOL purchased Tacoda and Quigo.

Asked about what effect a recession would have on online ad spending, Lanctot was fairly optimistic. "If there is a widespread recession, all advertisers will be impacted, but digital is more insulated than other channels", because of the accountability it offers - the ability to track its effectiveness better than other types of advertising, he said.

However, search might not be as well shielded, because even if marketers keep placing ads, searchers will be cutting back on their online shopping to try to save money, Lanctot said.

Original article: Ad spending moving from portals to search, entertainment sites from CNET News.com