Saturday, May 26, 2007

Internet Advertising Revenues Keep Growing, But . . .

If you've paid any attention to my list, you may notice that I'm a bit obsessed with advertising in the information age. If I find an article I bookmark it. It's because I believe that advertising drives what is happening to the internet and much else in the information sector.

Music piracy, the collapse of the first internet bubble, economic hard times in the news gathering industry and and other growing pains of the digital age have a common antecedent: getting people to pay for information is very difficult. In the early days of the internet people marched under the banner "Information wants to be free." In fact, people want information to be free. And people are a hell of a lot more difficult to control than information is.

So, some possibly good news from Advertising Age:

    Internet ad revenue grew 35% in 2006, with search, display, classifieds and lead-generation categories continuing to rise at a healthy clip[]
I say "potentially" with two caveats. First is that the figures don't include a breakdown of advertising that supports content versus advertising on advertising-only sites like Monster or Craig's List.

Second, content providers have reason to be worried about the increasing sophistication of online advertising (for example). In the pre-information age, advertisers only knew that potential customers would probably among the viewers of a particular medium and so carpet bombed the media with ads. Online advertising is more like smart bombs and, like smart bombs, advertisers need fewer of them to hit the target. And tools like AdSense let advertisers pay for the ads that actually find their mark.

All of this calls into question the ultimate economics of advertising supporting online content. Someone somewhere is surely writing about this with greater sophistication than my armchair observations. If I find it I'll link to it. If you find it, feel free to drop it in comments.

Meanwhile, one unqualifiedly good piece of news from the Ad Age article:
    E-mail's share remained flat, although total dollars spent on the tactic was up 34% to $338 million. Ms. Draizen suggested e-mail may be reaching a plateau and that spam-blocking by consumers also is a key factor in its slow growth.
That, and the spreading realization that herbal supplements don't actually make penises bigger.