by Joseph Weisenthal

Maybe The Online Advertising Market Won't Grow Forever

from the a-dose-of-reality dept

From the way it's portrayed, you'd think the online advertising market was this ever-growing juggernaut as major brands continued to shift spending away from traditional media to the internet. But the industry was surprised today when Yahoo CEO Terry Semel, speaking at a conference, indicated that the company was seeing slowness in advertising due to a pullback in both the automotive and financial areas. Just from what he said, it's not clear what inferences to draw. Certainly several auto companies are doing poorly, while at the same time retail financial activity, like mortgages, is pulling back sharply. But it seems just as likely that with the mad rush to buy online advertising, more companies are thinking twice about how much they spend in this way. Advertising is historically a very cyclical industry, strongly correlated with the strength of the economy, so while there's bound to a be continued migration from traditional media to advertising to new media, companies won't spend in this way unless they continue to see a solid return on their marketing investments.

Reader Comments (rss)

(Flattened / Threaded)

  1. identicon
    Rational Beaver, Sep 19th, 2006 @ 1:35pm

    That kind of talk does not drive subscriptions to over-hyped marketing newsletters. By 2010, online advertising will be bigger than the Beatles - NO MATTER WHAT!

    reply to this | link to this | view in thread ]

  2. identicon
    Steve E, Sep 19th, 2006 @ 1:46pm

    It will keep growing, big media spend has only just scraped the surface of the possibilities for advertising online. Viral is still in it's infancy (and very few people do it well), banner campaigns still have a long way to go (targetting and optimisation of campaigns need work) and SEM will evolve way beyond Adwords as it gets more intelligent.

    Yes, marketing spend is cyclical, but as a proportion of total spend I believe online will continue to flourish.

    reply to this | link to this | view in thread ]

  3. identicon
    Steve, Sep 19th, 2006 @ 2:17pm

    Well, the automotive industry is taking huge hits *anyway* since gas prices are so high. Not as many people are buying, so the sellers aren't spending.

    reply to this | link to this | view in thread ]

  4. identicon
    Jo Mamma, Sep 19th, 2006 @ 2:52pm


    I agree with #2 (hehe number 2).

    Anyway, yes, maybe the year/year growth INCREASE may diminish based on the cyclicality of the economy, but the overall trendline is very steeply up, IMHO.

    Also, I'd note that Google will probably continue to take market share from Yahoo! I wouldn't be surprised if Google tops estimates. Their targeted marketing is light years ahead of anybody else... really.

    I personally find myself looking at the Google ads occasionally, because they're something I'm usually at least mildly interested in.

    reply to this | link to this | view in thread ]

  5. identicon
    Erstazi, Sep 19th, 2006 @ 8:34pm

    Online Shrink

    Honestly though, the whole internet has shrunk. Content vs junk. The online advertising market is shrinking due to the lack of content on many websites. I am sure techdirt has covered this before, or maybe I am just in a dream state.

    reply to this | link to this | view in thread ]

  6. identicon
    TheJuggernaut, Sep 19th, 2006 @ 8:52pm

    don't you know who i am?

    i'm the juggernaut bitch!

    reply to this | link to this | view in thread ]

  7. identicon
    Steve E, Sep 20th, 2006 @ 12:23am

    Re: Online Shrink

    Agreed that the proportion of sites worth advertising on compared to sites you wouldn't touch with a barge pole has shrunk but thats just down to the exponential growth in websites these days.

    The number of sites to consider advertising on has grown though and thats why marketeers need more intelligent ways of managing campaigns and they need to begin to grasp the wealth of opportunities that very few agencies are yet embracing.

    reply to this | link to this | view in thread ]

  8. identicon
    jay, Sep 20th, 2006 @ 8:52am

    Online Ads

    While teaching my kids about safe browsing I had only one rule – don’t click ads. Ever. A significant percentage of the time I think online ads aren’t selling what they claimed to be selling. Clicking an ad might trigger a trip to browser Neverland, install the latest and greatest spyware on your machine, or worse, sign you up for AOL.

    Advertisers must assume that we’re always shopping, or that we haven’t trained our brains to look past the whack-a-mole game banner at the top of the page. That is a bad assumption. Still, companies pour money into online ads, so someone out there, lots of some ones, must still be impressed by the pretty blinkies – their heart skipping a beat every time they see the word “free.”

    My question is this; would a rational adult with the sense to have amassed some discretionary income really be swayed by pretty girls or the color orange? Who, while reading an article on techdirt, decides, “You know, I need a MacBook Pro with a printer, and if I click right here, I can save $100 (by mail-in rebate.) I think I’ll do it?” It doesn’t make sense.

    So, who is spending all this money online? Probably the same folks who, while sitting on the couch watching their favorite episode of Friends, see and ad for steel buildings and say, “You know, I think I need a steel building.” If we really needed any of this stuff, they wouldn’t have to sell it to us. They make it. We buy it. End of story. Are online ads so incredibly brilliant that we forget that we don’t really need Free Podcast Hosting? (I don’t even have a Podcast, but I couldn’t pass up the Free Hosting.) Or, are we just that stupid?

    reply to this | link to this | view in thread ]

  9. identicon
    Jonathan, Jun 12th, 2009 @ 1:15pm

    Seo is a must,

    Gorilla marketing in today's economy is everything, marketing to get through the recession!
    If your interested in web optimization for your site, there is a free site for uploading video ads for your business, they also have image uploads if you are not yet up to videos. The more sites you can link to the greater your market will be. They have a free link exchange as well.



    reply to this | link to this | view in thread ]

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