Could the enormous amount of content on the web be hurting online advertising revenue? That is exactly what is happening according to the Wall Street Journal.
The largest contributor to this is probably user-generated content. With everyone and their mother pushing out content (like the incredible number of videos of some guy playing guitar in his room on YouTube) with incredible frequency, the market is becoming saturated.
There is so much content to view, nobody has time to get to everything. WSJ’s Martin Peers writes:
What does the Internet display-ad market have in common with Zimbabwe? Both are printing nearly-limitless amounts of their main currency, vastly diminishing its value and undermining their future. The currency, for Web sites, is their ad inventory. And while Zimbabwe, under different management, can change course, the same isn’t true of the display-ad market. Web sites keep generating new content and extra pages on which ads can run.
That is why the sudden sharp weakness in online display advertising, which hit fourth-quarter revenue at companies ranging from Yahoo to Time Warner’s AOL and New York Times Co., isn’t just about a cyclical downturn caused by the recession.
Though the recession certainly isn’t helping. Nick Denton of Gawker made his thoughts on that pretty clear in this somewhat-famous post.
Still, many of us online content producers are pretty comfortable. For example, Peers even points out that Digg claims it’s seen no impact from the recession, and expects profitability for the year.
The content flood does bring to light an interesting situation in advertising. Just as always, quality content is going to be what prevails in the long run and attracts advertisers (not that I am against user-generated content). That is because quality content attracts viewers. That won’t change.
