Good summary of why online ads are being reduced:
Yes, the “economy” has a lot to do with it, but it’s a cop out.
The real reasons are simple:
- Social networking advertising is a sham. Do you want to run ads next to a pedophile? How about a she-man? Nope, I don’t.
- Video ads? Come on, YouTube commands a 75% market share and its parent’s CEO and its own CEO admit to being fishing for a revenue model. Nice.
- Search? Google is gouging prices thanks to its “commanding market share” (aka: monopoly), and turning away a lot of revenues in doing so, in order to skim the market from advertisers with deeper budgets and grander ambitions (read: clueless).
Hmm… what else. Oh, yeah, elephant-in-the-room time:
The world’s biggest property, Yahoo!, is being driven into the ground by a clueless President, an out-of-touch CEO and a Board that sold out shareholders - in my personal, humble, biased opinion - for personal gain instead of convince F500 advertisers to migrate online.
The second biggest property, MSN, is pretty much spending all of 2008 trying to convince itself that MSN.com is worthy of ad dollars while it tells Wall Street that it effectively isn’t.
The third biggest property, AOL, is well, being AOL: “please, come work for us… cause tomorrow you might be laid off”.
IAC is blowing itself up… that can’t be too easy for advertisers to embrace and understand…
MySpace - the world’s biggest social networking site - has 99% questionable content and can’t migrate its users fast enough to higher yield pages such as MySpace TV - disclosure: we’re their pushers on that front.
Facebook is finally catching up on reducing the skata that has hampered an otherwise great “utility”.
I wish I could go on, but the point is: online advertising could be bigger, but is being weighed down by our own stupidity… starting with VCs stupidity for investing in crapware. Quick: give me 5 successful VC exits this year?
Right…
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WatchMojo NewsletterHmm. Two and a half yars ago when I started WatchMojo.com, media companies didn’t bother replying to our overtures… looking down at us. When I say media companies: read all of them, but put a particular emphasis on print and TV companies.
Pretty quickly,
- print companies looked at us as potential lifelines, because they looked at online video as a brave new world that could save their dying print franchises (I could insert a hyperlink for each word in that sentence).
- TV companies began to feel the way print and music media firms did in the late 1990s-early 2000s.
Today, in our private talks, they “admire our vision” and “respect our foresight”. Translation: their businesses are about to join print, music and radio in the toilets.
More from our vault:
- Understanding TV executives Angst and Envy
- Web Video Represents $150B market cap in 2011, but not for TV companies
- Digital Revenues are Never Incremental for Old Media
- Will TV companies face same fate at Print Companies?
- If You’re Old Media, What Would You Do?
Hopefully local advertising won’t be as susceptible to whatever disease social networking advertising became vulnerable to… because otherwise, you might as well reach for the Lever 2000 and flush those puppies down the toilet, too.
For the record, I expect:
- online local advertising to do even better than the forecasts suggest because newspapers - who owned this space - are paralyzed into fear.
- social networking revenues will do worst than expected. Don’t get me wrong, media planners and buyers will want to look cool and act younger than their age and dip their toes with social networking site advertising. But the propensity for the proverbial shit to hit the literal fan is much higher in social networking than anywhere else… so the repeat buy and upping of the spend will be rare. That last reason is what causes forecasts to come in lower. To quote Chris Rick, it’s on the “comeback” that they make money… and there’s too much nefarious content on social networking sites to see much meaningful comeback…
Mark my words.
There’s a saying that states: fear is temporary, greed is permanent. Well, you can add, greed is global, too.
Apparently, after losing their shirts and fleecing their own investors in the North American video market (quick, name me on more successful exit in the space other than YouTube - too late, the elevator’s moved on), VCs are now losing their shirts - and making me lose my lunch - in China, too.
Wow. No comment. The idea is: take a successful idea and export it to another market, not take a crappy idea and export it.
It’s amazing how quickly shareholders and public perception can change on a company. Up to Yahoo!’s disastrous handling of MSFT’s acquisition overture, I was fairly bullish on Yahoo!, despite lacking much faith in Jerry Yang and Sue Decker… I believed that the company’s assets were simply too grandiose for the company to shipwreck.
But with Yang and Decker showing how clueless and reckless they are, I have lost all faith in the company. The stock market has too… evidenced by the company’s slip to less than $20 a share last week.
To avoid the company’s shares to fall further… you are now seeing one desperate attempt of merger after another. Today, it’s AOL Time Warner’s turn to come under the spotlight as a partner in a shotgun marriage. Eventually, one of these dancing partners will stick and merge with Yahoo!… and with that, the company shall sink like a rock.
AOL alone is a fine company, with some great assets.
Yahoo! alone is a fine company, with some great assets.
Combined, it will be a mess to manage.
The web is perfect for advertising revenue generation:
- plenty of time spent on the medium,
- free multimedia content,
- massive floods of audience migrating to the medium from other platforms, creating an inefficiency with regards to time spent vs. ad dollars,
- optimal technical and design layouts and configurations for advertising,
- an open system.
Wireless? Nope, nope, nope, nope, and nope. Wireless advertising is the latest - and ongoing - great white hype. Yes, wireless is growing faster than the Web did, but there are countless of reasons - listed above - why mobile advertising won’t pan out relative to current expectations.
In talking about AdMob, Venture Beat talks about the explosive future growth of wireless advertising… but count me one in the cynical camp.
Don’t get me wrong, I’ve been impressed with the size of the potential market, too. Here’s our lengthy post about the size of the wireless entertainment and mobile advertising space; but its state is quite different and the players don’t have the foggiest clue what to do.
Much the same way, for example, that we want everything to have an advertising business model, sometimes, there’s a better e-commerce play (think Twitter). But the e-commerce multiples are a poor man’s game compared to advertising, so expect more investors to be fleeced with the promise of the great upcoming boom in wireless advertising.
Hey, I want this to be true, WatchMojo.com’s massive video library is perfect for wireless… but given my experience dealing with this space, I’m short on this, at least for now.
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