The Squeeze in Online Ads

Everyone knows that advertising revenues are down significantly over the past year. The noticeable impacts can be seen at the many newspapers that have gone out of business from lack of revenue. The reality is that it’s not just hitting the newspapers but even web advertising is down from businesses holding back due to the slow economy.

Google has made many fortunes with it’s Adsense program and because of the size and success of Google they dominate a significant portion of the advertising space available online, however this article in the March 2nd issue of Business Week talks about a niche market that is getting the attention of the big names. Seems like many companies are starting their own advertising networks which are focusing on web pages and websites that have less traffic where advertising may not be found. The audience that is reaching these websites are smaller, however the content of the webpage may be of better quality and thus a more targeted reader.

Advertising today is typically done on the pay per click model so the goal is to get the clicked by the person who is best targeted for your market. The order of the listing is typically headed by those willing to pay the most per click. These prices are constantly bid on and the best search terms are often very competitive and expensive. These smaller advertising networks might not advertise on the highest traffic sites, but they may offer a more targeted customer and the article talks about the price being much less than the same terms on Google.

The article talks about sites like Yahoo and Martha Stewart starting their own advertising networks. This strategy certainly makes sense to a seach engine like Yahoo who has the traffic to make some serious money, additionally, this advertising strategy makes sense to the e-retailer because he/she can get a targeted customer to the site for less money, and that reduces overhead leading to higher margin.

And HIGHER MARGINS, is what business is about.