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The rapid growth of online advertising is expected to see the sector overtake US newspaper advertising in terms of size by 2011.
The forecast comes against a backdrop of declining advertising sales reported by newspaper groups this year in spite of continued strength in the US economy.
In the 2007 study, published on Tuesday, VSS forecasts that online advertising will grow by more than 21 per cent per year to reach $62bn in 2011, making it bigger than newspaper advertising, which is expected to total $60bn in 2011.
Online ads to overtake US newspapers
And then you read this:
Web advertisers are spreading their online ad dollars across more sites and are paying lower rates in many cases, putting pricing pressure on established Internet players.
Several companies are already feeling the heat after reporting results that showed weakness in online ad revenue from Web banners and other display ads.
Time Warner's AOL reported a sharp ad sales slowdown last week. In mid-July, Yahoo! posted disappointing revenue from display ads and cut its forecast for the rest of the year. At least three other big Web publishers - the New York Times, the Washington Post and the technology-focused Cnet - reported slowing Internet ad growth recently.
Online Ad War [nypost.com]
It looks like there online ad spend will continue to grow, with online spending being distributed more frugally amongst a broader range of players.
I think one of the problems faced by newspaper sites, AOL, and other general-interest sites or portals is their lack of audiences who are motivated to buy. Take travel as an example: A few years ago, a newspaper like the Des Moines Register pretty much had a lock on people in Iowa who were looking for flights, tours, cruises, etc., so advertisers were forced to pay for waste circulation if they wanted to reach Iowa travelers. Today, hot travel prospects are more likely to be visiting travel commerce sites, destination sites, and special-interest sites about cruising, adventure travel, and so on. An airline, hotel chain, cruise line, or tour company no longer has to pay a premium to (or buy waste circulation from) newspapers and other general-interest media.
Fortunate those men and women who's expertise and interest matched a highly fragmented market where people wanted and needed to reach each other. (Bed and Breakfasts reaching out to those who wanted a different type of lodging is a very good example of a market to serve. If you had a B&B directory and put it online, woooo!)
All of those folks wanting to serve a mass market with the "news" alas have discovered via the web exactly how interested everyone is in their reporting. I have seen the real numbers in real time. Some articles get read by NOBODY.
Which is why it is nuts how news groups put their archives behind a pay wall. They were sitting on all of this information where they could have been the local or regional expert on the area, and they let everyone and anyone else have a shot at it first.
The leading online newspaper consultant screamed at his clients to get into the retail and business directory biz online. They just sat there. Yellow Pages and Google took it over.
Think of all those small business owners putting $100 a week into online contextual ads. Does not seem like a lot but multiply that $100 by five thousand businesses in that space and it begins to add up.
The cheapest ad spends in local papers I've ever come across were far more expensive than $400 per month and short term return on investment generally sucked.