CibbuanoIs online advertising on the decline?
January 7th 2009 07:42
That's the question posed on Ars Technica, following news that The Consumerist will be sold from the Gawker Media group of blogs.
Though blogs get sold all the time, Ars is ticked by Denton's reason for selling the site: that he's concentrating his profitable sites in preparation for a cold advertising winter.
The author of the post, Jon Stokes, offers some more insight into the decline of advertising budgets... Stokes notes that MasterCard has announced "an unprecedented, double-digit year-over-year decline in the advertiser-heavy luxury goods and electronics categories", goods that inevitably drive the consumer market and, therefore, the advertising market.
He also suggests that semiconductor chip companies like Intel and AMD are seeing a 30 percent revenue loss which is rather gloomy for the industry, which requires spiralling profits to push research into next-gen technology.
It's a gloomy outcast, especially considering that he further states that advertisers are going to realize that online ads are not worth the cost, as web users are increasingly adept at ignoring ads, and don't like to be bothered.
My own opinion is somewhat less depressing... I see online advertising as a powerful medium, as properly targeted ads are well-worth the cost. When people come to 20/20 Filmsight, my film review site, they are usually there because of interest in a movie or related news - ads from the New York Times and other review sites, or electronics-related ads are targeting the right audience, then.
It's the flimsy ads that Google delivers, poorly targetted, that take away from the value, I think. There's no one at fault, either - obviously, Google is trying to deliver the best ads possible, but I think online advertising needs to mature beyond this point.
"Consumerist is the latest of Denton's blogs to be sold off, in a move that he described in an e-mail to AllthingsD's Peter Kafka as part of the process of "pruning" his network down to only his highest-growth, most profitable sites. Hollywood gossip site Defamer.com is also on the block."
Though blogs get sold all the time, Ars is ticked by Denton's reason for selling the site: that he's concentrating his profitable sites in preparation for a cold advertising winter.
"Denton takes Mary Meeker's (in)famous Web 2.0 presentation as a starting point; in it, the Morgan Stanley analyst suggested that for each percentage point decline of GDP growth, advertising market growth drops roughly three times as fast.
But Denton thinks that Meeker is too optimistic, and he refines her results with some other GDP and ad market data from downturns in Indonesia, Sweden, and Japan to arrive at an ad market spending collapse of between 9 and 43 percent over the course of the entire downturn. Denton then advises publishers to prepare for the worst-case scenario of an eventual 40 percent decline, with a possible 27 percent drop coming in 2009."
But Denton thinks that Meeker is too optimistic, and he refines her results with some other GDP and ad market data from downturns in Indonesia, Sweden, and Japan to arrive at an ad market spending collapse of between 9 and 43 percent over the course of the entire downturn. Denton then advises publishers to prepare for the worst-case scenario of an eventual 40 percent decline, with a possible 27 percent drop coming in 2009."
The author of the post, Jon Stokes, offers some more insight into the decline of advertising budgets... Stokes notes that MasterCard has announced "an unprecedented, double-digit year-over-year decline in the advertiser-heavy luxury goods and electronics categories", goods that inevitably drive the consumer market and, therefore, the advertising market.
He also suggests that semiconductor chip companies like Intel and AMD are seeing a 30 percent revenue loss which is rather gloomy for the industry, which requires spiralling profits to push research into next-gen technology.
It's a gloomy outcast, especially considering that he further states that advertisers are going to realize that online ads are not worth the cost, as web users are increasingly adept at ignoring ads, and don't like to be bothered.
My own opinion is somewhat less depressing... I see online advertising as a powerful medium, as properly targeted ads are well-worth the cost. When people come to 20/20 Filmsight, my film review site, they are usually there because of interest in a movie or related news - ads from the New York Times and other review sites, or electronics-related ads are targeting the right audience, then.
It's the flimsy ads that Google delivers, poorly targetted, that take away from the value, I think. There's no one at fault, either - obviously, Google is trying to deliver the best ads possible, but I think online advertising needs to mature beyond this point.
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