WSJ: Not Enough Slices In Web Ad-Dollar Pie
May 18, 2009 at 5:11 AM (PT)
The Internet-ad business is a little like a MINI COOPER, writes THE WALL STREET JOURNAL. "There is a limit to the number of people who can squeeze inside. Anyone looking to start an ad-supported website should remember that. While the amount of potential ad inventory that can be created in new Web pages is virtually limitless, that isn't true for the amount of ad dollars available.
"Yet newspapers, magazines and TV outlets are each vying with Web-only concerns for a piece of the action. There are even some media companies that historically didn't sell ads. VIVENDI's UNIVERSAL MUSIC GROUP, for instance, is ramping up its recent online-ad effort with a new music website. Oversupply of inventory could be particularly brutal for pricing.
"Rising competition for ad dollars isn't an Internet-only phenomenon, of course. Phone companies, for instance, have their eyes on advertising both online and off. But the Web has only a small piece of the overall ad pie.
"Consider: Between 2006 and 2008, ad spending on traditional media dropped 4.8%, or $6.7 billion, to $132.2 billion, according to TNS MEDIA INTELLIGENCE. Ad spending on the Internet rose by almost exactly the same amount, $6.6 billion, to $23.5 billion, estimates PRICEWATERHOUSECOOPERS.
"The losers were newspapers and radio companies, which suffered almost all the erosion. The winners? GOOGLE and YAHOO, which took 47% of online-ad revenue in 2008, estimates EMARKETER."