Bubble Popping Time For Online Ads

    August 7, 2007
    WebProNews Staff

Ad revenue dropped for every major Internet player but Google in the second quarter of this year.

Whispers of the last dot-com crash have begun to surface again.

The rapid fire purchasing of ad networks by Yahoo, Microsoft, and Google, whose DoubleClick deal is still pending, now looks like a harbinger of advertising revenue to come.

It’s all about the network, and grabbing more slices of an advertising pie that used to be doled out in mammoth portions to the biggest names on the Internet. While Google will probably continue to enjoy its slice with ice cream and chocolate sauce, the competition became a little hungrier.

The New York Post suggested that advertisers are sharing the wealth with the Facebooks and MySpaces of the world. Advertisers have been shopping around for better deals.

Targeting niches looks like the strategy of choice.

Paying to hit a demographic that should outperform the general population in conversions earns a much better return on investment.

Networks and others that can offer those niches can profit at a discount from what an ad on the front of AOL or CNet might cost.

But Silicon Alley Insider hinted the downturn may hit those smaller sites, just as it has the larger ones:

The situation is also reminiscent of the late 90s, when freely flowing venture capital created so much online inventory so fast that prices collapsed, driving a whole generation of start-ups out of business. The problem now is not VC money; it’s the ease with which new online media businesses can be established.

A larger Internet userbase, more broadband connectivity, and heavier online usage in general may offset such a decline.

It makes for an interesting wait for third quarter numbers from the big online players to arrive.