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2009-10-10

The Advertising Glut

Last Thursday, I listened to a fascinating episode of the NPR program On Point with Tom Ashbrook titled "What's Next for Advertising?" You can listen to it yourself here.

During the program, Bob Garfield made a truly insightful point that I've yet to hear anywhere else. He thinks that online advertising is unsustainable. The Web is a limitless platform, offering limitless advertising space. However, There is not limitless advertising demand or inventory. There will always be a glut of advertising space or supply, which according to simple economics means prices will always be driven downward.

Therefore, the advertising business model as it currently exists cannot support the cost of creation of even small amounts of premium content, because the Web's open content creation and distribution ecology is also a leveler of content quality—the cream will always rise to the top, but it is all still there to see and fulfill niche tastes and tendencies.

This is bad news for Internet advertisers of all stripes—both the content creators and those who'd try to sell ads against their content. The only way, in this scenario, to make money is through monopoly. Which would explain Google's profits and push to grow their market share.

1 comment:

ryan said...

Great subject. I have been playing around with the idea of the comment structure recently.


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