Display advertising has actually overtaken search advertising in revenue, and it is continuing to grow at a faster rate. This is why Google bought Doubleclick.
The US online ad market today is $32B. Growing at 8-12% per year (some estimate 25%) this year.
What is happening is old display advertising dollars are moving online, and it is happening a lot quicker than anybody thought it would. Online will overtake print this year (print will continue to shrink 8-10% p.a). TV is worth about $60B per year. Local ad spending is being hurt the most and is also the largest, bringing in around $140-160B per year.
So the trends are old advertising money moving into online. Online making up 20% of all ad spending last year to forecast ~35% next year. Print and local shrinking, and within online advertising display advertising is now larger and growing quicker than search advertising.
Knowing these trends, adapt this back to working out the companies that stand to gain. Facebook currently has the most time spent online for any website. It will be the largest display advertising inventory pool. People are no longer reading magazines, or newspapers or flicking through the Yellow Pages but rather they are spending a lot more time on the web. Spending a lot more time on the web for most average people, at the moment, means spending time on Facebook.
Being bullish on Facebook, i'd much rather that they be in the position of dominating user time and having a shitty ad product, than having a great ad product and losing user time.
Search advertising may be a lot more efficient and profitable, but display advertising is still king. It is a lot easier to create display advertising inventory than it is for search. Google moving into display advertising is all you need to know.
Facebook can fix the ad product and experiment with it over time, finding a way to best adapt those offline dollars to online display advertising. Building a site with a bilion users and a pretty good moat is a lot more difficult.
The US online ad market today is $32B. Growing at 8-12% per year (some estimate 25%) this year.
What is happening is old display advertising dollars are moving online, and it is happening a lot quicker than anybody thought it would. Online will overtake print this year (print will continue to shrink 8-10% p.a). TV is worth about $60B per year. Local ad spending is being hurt the most and is also the largest, bringing in around $140-160B per year.
So the trends are old advertising money moving into online. Online making up 20% of all ad spending last year to forecast ~35% next year. Print and local shrinking, and within online advertising display advertising is now larger and growing quicker than search advertising.
Knowing these trends, adapt this back to working out the companies that stand to gain. Facebook currently has the most time spent online for any website. It will be the largest display advertising inventory pool. People are no longer reading magazines, or newspapers or flicking through the Yellow Pages but rather they are spending a lot more time on the web. Spending a lot more time on the web for most average people, at the moment, means spending time on Facebook.
Being bullish on Facebook, i'd much rather that they be in the position of dominating user time and having a shitty ad product, than having a great ad product and losing user time.
Search advertising may be a lot more efficient and profitable, but display advertising is still king. It is a lot easier to create display advertising inventory than it is for search. Google moving into display advertising is all you need to know.
Facebook can fix the ad product and experiment with it over time, finding a way to best adapt those offline dollars to online display advertising. Building a site with a bilion users and a pretty good moat is a lot more difficult.