Weak Online Advertising

I’m always on the lookout for weak signals for the online advertising market, the driver for the consumer internet.

Now it looks like ad spending failed to meet expectations this year and social media is creating an inventory glut.

I wonder if Google’s market share vertical integration strategy will structurally impact the market. Some see this consolidation as a sign of strength, but it could be a longer term weakness. At the least, there is a short term driver for M&A for erstwhile competitors. The sponsorship segment of the market seems to be doing well and supporting the proliferation of micro-pubs and there is lots of room to innovate. As long as people keep buying.

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Ross Mayfield is CEO and co-founder of Socialtext, an emerging provider of Enterprise Social Software that dramatically increases group productivity and develops a group memory.

He also writes Ross Mayfield’s Weblog which focuses on markets, technology and musings.