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The Resiliency of Online Advertising
The online advertising market is now finally mature. When the Internet and Web first rose to prominence in the Great Dot-com Bubble of 1995-2001, advertising was everywhere! Even annoyingly so, with pop-ups, advertising bars, etc. Have we returned to the same advertising “irrational exuberance” just 7 years later? Will the advertising market stay or will it implode?
Social Networks launch advertising platforms
MySpace
- SelfServe
- HyperTargeting
- SocialAds
- Project Beacon
Major Acquisitions By Major Players
Microsoft
- Acquired aQuantive for $6b last summer.
- Invested $240m for a 1.6% stake in Facebook so their ads can be placed on Facebook’s advertising platforms.
- Acquiring DoubleClick for $3b last summer (still pending).
- Planning to announce a major push to get ads into video games.
Old Media
- 5 newspaper companies are planning to launch an online advertising platform.
- Comcast is planning their own online advertising platform.
- Verizon is planning their own online advertising platform.
- AT&T is planning their own online advertising platform.
Conclusion
The online advertising scene is here to stay. It is growing at a phenomenal rate. According to ZenithOptimedia forecasts by 2009 world-wide advertising will be $495b, and online advertising will account for 10% of that! Here is a chart of advertising spending by medium from MarketingCharts. Currently, online advertising takes in 8.7% of all advertising — with Google owning the majority of that.
Online advertising and advertising, in general, is a resilient market. Advertising runs the world. It sells things. People buy things. So advertising will always be around. Online advertising has finally grown up. While, we may be in a slight bubble — in relation to the cost of acquiring advertising networks and new online advertising platforms — the conclusion is that it is here to stay. I believe there will be a slight correction for valuations for advertising networks and platforms; however, the good ones will survive.
As more and more people go online, a greater percentage of online advertising dollars will natural follow. As a result, more online advertising platforms will continue to be launched. When people ask how companies — such as: Google, Yahoo, MySpace, and Facebook — make money by giving services away for free (and just utilizing advertising), it’s easy to smile and review the numbers.
CATEGORIES: Business
TAGS: advertising, aquantive, at&t, comcast, doubleclick, facebook, google, microsoft, myspace, verizon
- Mashable
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November 8th, 2007 at 9:49 am
Great analysis backed up by the numbers!
November 11th, 2007 at 11:07 pm
A related post i read suggest potential legal clashes with FB’s new platform. It will be interesting to see how it develops.
November 13th, 2007 at 12:40 am
Dima,
Highly targeted advertising and privacy will always be a concern. Facebook’s Social Ads platform may have over-stepped the bounds. If they aren’t careful there will be a huge user backlash. Google had this problem when they placed ads in Gmail, which required machines to scan the e-mails for keywords so relevant ads would show up. However, people got scared that Google was reading their e-mail. Steps needed to be taken to assure users that this was not the case.
November 13th, 2007 at 1:26 am
I wonder if there’s still a place for a startup in online ads business?
November 13th, 2007 at 1:29 am
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