Online Advertising Outlook: Revenue Up, Revenue Down -- You Choose - InformationWeek

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6/12/2008
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Online Advertising Outlook: Revenue Up, Revenue Down -- You Choose

The revenue figures for first quarter online advertising are in and depending upon your perspective, the glass is half full, half empty, or has a big crack in it. But that doesn't mean there's not money to be made.

The revenue figures for first quarter online advertising are in and depending upon your perspective, the glass is half full, half empty, or has a big crack in it. But that doesn't mean there's not money to be made.If you sit too close to a tennis match (or a Phoenix Suns game before the Shaq trade), you risk whiplash as your eyes follow the ball careering from one end of the court to the other. Unfortunately, whirling from one perspective to another isn't contained to the court. Take, for example, these two recent headlines about online advertising:

"Internet Display Advertising Slowed In First Quarter"

"...online advertising continues to grow, despite economy"

"Web display ad growth dips in the first quarter"

"Online Ads Surge in Tepid Spending Environment"

Forget, tennis neck, this is more like that scene in Chinatown when, amid a hailstorm of face slaps from Jake Gittes, Evelyn Mulwray cries:

"She's my daughter! She's my sister! She's my daughter! My sister, my daughter. She's my sister and my daughter."

Well maybe it's not that dramatic, but the swirling conclusions about the condition of our dear Internet's lifeblood revenue. Do confuse. Parsing it out, really hangs on one word "display." Display advertising is all those banners, skyscrapers, and other spots with pictures -- not to be confused with search advertising (that thing Google does). So online "display" advertising was down in Q1...or was it.

According to TNS Media, Internet "display" advertising rose 8.5% in Q1. The reason that's a decline is that a year ago it rose 16.7% in the same period. So we're still making money, but growth is slowing. But before the specter of a -- gasp -- mature market -- let's turn to another sheaf of data. According to IDC, U.S. online ad spending was $7.1 billion in the first quarter -- that's up 23.9% from Q1 2007 -- predicting that ad spending on all media will decline 7% this year, but online advertising will grow at 15 -20% clip (per quarter). How does that compare with "offline" advertising? From a growth perspective, rather well by Erick Schonfeld's reckoning:

"Even with the slowdown Internet ad spending still grew faster than that for TV (1.7 percent), magazines (0.8 percent), newspapers (-5.2 percent), radio (-4.5 percent), and outdoor (2.5 percent)."

But that's what happened. What happens next is a bigger question. John Letzing at MarketWatch is throwing out $30 billion as the nut for online advertising this year and speculating about online making inroads into television. Meanwhile, over at Editors Weblog, Sarah Schewe contends online advertising is tragically flawed -- it's all very interesting until you realize she's talking about the outlook for newspapers (and outlook for newspapers is a different discussion).

So with all these billions flying around in varying levels of projected growth, what's a smaller business to do? Cash in, of course. Get thee to an online ad broker! But wait, more and more, you don't need one. The New York Times has just launched a self-service site for smaller business to create and manage campaigns on NYTimes.com (read Schewe's piece, if you're looking at this). Of course, there's always Google AdWords (if you do only one, this is the one). And last month Smalltown expanded WebCards.com -- for $9 a month, business can create webcards on the site and embed them on Smalltown's partner network sites -- plus the webcard sites show up in search results.

No excuses, tapping into online ad revenue has been easier, and depending on what reports you read, there's some money to be made.

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