Sunday, 4 May 2008

The Online Ad Story in a Picture

April 11, 2008, 2:27 pm

The Online Ad Story in a Picture

By Saul Hansell

Sometimes you see a graph that tells the whole story. The one in The Wall Street Journal this morning showing the relative share of online advertising spending of the big players is one of them. (The data, from eMarketer, is below.)

The big picture is that the online ad market is booming. But the big portals that dominated spending in the early part of the decade — AOL, Yahoo and Microsoft — are all losing share, even though all of them have been buying up advertising companies. Social networking sites and sites further out the long tail are increasing their share of audience time, and thus ad dollars.
You might say it is like the big three TV networks after cable arrived. Except for one difference: Google. No cable network arose to sop up one-third of the commercial time.

Source: eMarketer

It’s not that we didn’t know this. Of course Google is booming and the traditional portals are struggling. But the numbers are stark: Last year, Google’s advertising revenue of $6 billion was roughly the same as that of Yahoo, AOL and Microsoft combined.
Google’s growth is slowing, but it continues to be a juggernaut. EMarketer estimates that ad revenue at Google will increase by 32 percent this year. That makes it the only one of these four companies that will grow faster than the ad market as a whole, which is estimated to expand by 23 percent this year. (To be sure, the uncertain economy makes any predictions especially suspect this year, but the relative trends appear stable.)

So as we try to second-guess the mating games of the big Internet companies, this graph raises the question: Does combining two past-their-prime giants that are both losing market share really solve any problems?

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