Wednesday, May 30, 2012

An "uh oh" Moment for Online Advertising Proponents

The standard argument about online advertising volume, for decades, has been that, over time, "eyeballs" (audiences) lead to advertising. It's a reasonable argument. So the next challenge is that, if online audiences and proportional advertising to those audiences begin to hit a 1:1 relationship, it is hard to argue that lots more revenue growth is possible, in the near term.


To get more ad revenue, online sites would have to grow their audiences. According to Mary Meeker, online share of advertising spend now is very close to online's share of media audience. 


That would suggest it is unreasonable to expect online advertising revenues to grow very fast, or much more beyond present levels, unless audience attention really shifts lots more. 


The one place where there is a clear gap is the mobile venue, where advertising dramatically lags attention, by about an order of magnitude.


It takes no special insight to predict that attention now will be focused squarely on mobile advertising, as it remains the channel where revenues most lag attention. Conversely, print is the medium where spending is vastly overdone, in terms of audience attention. 


The "bad" news is that we should be watching for signs that online advertising revenues begin to decelerate, in terms of growth. 
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KPCB Internet Trends - 2012

 

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