The Sweet World of Advertising

As most of you have noticed, we have a banner ad on the site, in a desperate attempt to scrape together a few (symbolically important) pennies from ad revenue.

But looking beyond our humble site, online ad revenue is a huge industry. I pulled this table from this New York Times article, which discusses the online advertising industry.

What is most interesting to me is that although the ad market is growing (expected to grow 23% this year), '... the big portals that dominated spending in the early part of the decade — AOL, Yahoo and Microsoft — are all losing share, even though all of them have been buying up advertising companies."

How does Google do it? We all know, it isn't a very interesting question to ask. What is more interesting is to look at the remaining 43% of the ad revenue market, and ask where that money is going. I tried to download the breakdown from emarketer.com, but their research costs too much. Either way, I see that portion growing in market share in the future, as our online advertising grows from predominantly search-based advertising to more focused advertising, where social networking sites lever the data they have from their to advertisers.

Another cool region for growth in online advertising is in the mobile phone industry. As more and more phones include GPS positioning, we're probably going to see targeted advertising to our phones, based on where we are (literally). How much money do you think Toyota would pay to advertise directly to you, if they found out that you were just at a Honda dealership? Why would you ever allow advertising on your phone? What if it meant your phone plan was cheaper, even free?

Here is a fantastic WSJ article about the state of the industry, very interesting. It discusses the more strategic side of the industry, mostly focusing on the predicted results of industry consolidation. I'd really suggest reading it, as it isn't very long.

An interesting note: The New York Times article is linked to a WSJ article that they cited. This i a poor business practice, even if it is good journalism, because it leads away from the NYT site. You'll notice that the Journal almost never does this. And obviously, the reason why is to maximize their ad revenue from site traffic...