Well, leave it to the New York Post to yellow their headlines by proclaiming an “online ad war.” A little over the top, but luckily the rest of Holly Sanders’ article brings up an interesting development in the online advertising industry: there is a sort of power shift happening as a result of saturation.
Yahoo, AOL, and Google (well, Google to a lesser degree) have reported disappointing quarters recently. Sanders says that’s largely due to an increase in online advertising choices, especially since the dawn of the social network. More choices means a lowering of costs, and also a more tightly targeted audience.
From the article:
“People are still buying display ads, but they are buying them elsewhere and for less than if they bought them from AOL or Yahoo!,” said Jupiter Research analyst David Card.
This shift is benefiting newcomers – such as social networking sites like Facebook, MySpace and YouTube – at the expense of more established rivals that were once considered “must buys.”
“We have a lot more choice and a lot more options out there,” said T.S. Kelly, head of research at Media Contacts, the interactive arm of media buying firm MPG.
There’s an interesting balance emerging. Google and Microsoft and Yahoo most likely saw it coming long before any of us, which is why they’ve been spending billions on companies like DoubleClick and aQuantive, why Google dabbles in print, in TV, in radio.
The ad industry is diversifying rapidly, or better, fragmenting, causing the current price busts. However, it only seems a matter of time before these giants collect that scatter and ad the pieces to their overall arsenal.
Don’t think for a minute that the big boys won’t guard against dropping ad prices, and spend a lot of money doing so.
What’s nice about the current environment, though, is that it is still startup friendly, and new businesses are set up daily with the potential to challenge and keep the market somewhat honest. You can thank Net Neutrality for that, at least, which is why it is important to keep it that way.
Even if giants will step over the fences when they have to, at least the little ones aren’t barred from entry under current conditions.
