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
- Project Beacon
Major Acquisitions By Major Players
- 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.
- 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.
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.