Wednesday, September 3, 2008

Internet advertising has arrived!!

Internet advertising in the US has crossed 21 B dollar mark in 2007. More importantly it has now surpassed broadcast network advertising, cable network advertising and radio advertising. Only news paper advertising and direct mail are ahead of Internet Advertising, admittedly by quite a bit. Both newspaper and direct mail are above the $50 B mark. It won’t be long when these last bastions of traditional media advertising will also fall.

Why do I say that? Let’s look at where Internet advertising was relative to other traditional forms of media in 2005. It was at $12 B - below broadcast TV, Radio, Cable TV and Consumer magazines. Now all these have fallen to fast growing (> 25% CAGR) internet advertising phenomenon. I believe it is still early days for internet advertising.It is going to grow by both eating into the share of traditional advertising as well as by growing the advertising pie.

In terms of forms of internet advertising, search based advertising has provided the biggest fillip to Internet advertising by capturing the imagination of advertisers. Search is clearly seen as the gateway to internet and hence is proving to be the most valuable real estate on the internet.
Right now there are tons of new media innovations that haven't realized their potential - video, gaming, social networking sites and downloadable and portable media, to name a few. These provide new and innovative ways for advertisers to engage consumers and get their message across.

The question that I have is what will be the nature of growth from here on for internet advertising. Will it be organic, albeit, rapid evolution of a range of innovations or will it be yet another “home run” internet phenomenon. For now IP video is not living up to its advertising revenue promise as evidenced by the challenges faced by Google in terms of being able to monetize YouTube traffic. Exciting times !!

1 comment:

rajeev kapoor said...

A good view point!
I agree that internet advertising will take over in advanced countries. But in countries like India, it will share the platform with TV. Lack of education is going to be the stumbling block. Direct mail is a very good medium, but disliked by many.
PCs are still expensive and till the prices come down, the penetration in the educated group will remain low in India. The atom processor and other innovations will help in achieving this. The connectivity prices are quite low in India and easily available too.
The potential of internet advertsing is substantial.