Microsoft’s attempt to buy out Yahoo Inc. for $44.6 billion is a firm testament to the continuing profitability of online advertising. With some economists talking “recession” and the stock market reacting unpredictably over the last few weeks, online advertising continues to show robust growth thanks to companies like Google, Yahoo and Microsoft.
And whether Microsoft prevails in acquiring Yahoo or not, online advertising is considered to be a booming growth area that shows no sign of decline, even if other areas of the economy seemed uncertain right now. The Interactive Advertising Bureau is reporting that online advertising in the United States grew by more than 25% in 2007. And analysts are confident that there’s plenty of room for additional growth.
Currently, online advertising is less than 10% of all US advertisement spending. However, Americans are spending more and more time online– some surveys show that the average American receives 20% of their media “intake” from the Internet, showing that the potential for growth in online advertising is vast.
Crucially, advertising online also provides advertisers with tracking and performance tools that are unheard of in the off-line world. An advertiser can determine exactly which ads are profitable, which demographic they appeal to, and easily A/B test two ads to determine which is most profitable. This kind of exacting performance tracking appeals to many advertisers, especially those in smaller niche markets who are seeking very specific consumers.
And unlike television, newspaper or radio advertising, with online ads, advertisers only pay a fee when a Web surfer actually clicks on their ad. This means that under-performing ads have lower costs, allowing advertisers to experiment and increase their overall ad spend. This would be the equivalent of running a television commercial that you didn’t have to pay for when the viewer got up to go to the kitchen on the commercial break.
The level of control, user tracking and nonpayment for un-clicked ads make online advertising (or “pay per click advertising) a great value for businesses seeking customers online. It also levels the playing field greatly between Fortune 500 corporations and home-based start ups.
For example, if you search online for “greeting cards,” you will find ads by the biggest names in the greeting card industry, like Hallmark. But you’ll also find ads from small “cottage industry” suppliers and even home-based micro businesses — all competing together for the same consumer.
Is this kind of egalitarian culture, along with the reasonable startup fees, that attracts many advertisers to the Internet, the experts agree that there still plenty of room for growth in the burgeoning online advertising industry.
Related Business Directory Categories:
Online advertising is the most effective way to get targetted traffic on your website. It allows you to target ads based on your demographics and also enables you to test them instantly unlike offline ads.
Comment by Navtej Kohli — February 25, 2008 @ 1:11 pm