Upstart sites divvy ad revenues with established players
By Erina Lin, Monday 13 August 2007 at 22:58 :: World Digital Media Trends :: #408 :: rss
Online advertisers now are allocating their budgets across more sites, and paying lower rates in many cases, placing pricing pressure on established online players.
Several companies already met the challenges when the reports showed weakness in online ad revenue from banners and other display ads.
Time Warner’s AOL reported a severe decline in ad sales in early August. In mid-July, Yahoo! revealed dismaying display ad revenue and cut its forecast for the rest of the year. The New York Times, the Washington Post and Cnet also reported the slowdown of ad growth recently.
According to analysts and ad executives, the large portals and content providers are starting to feel the scrape after the heyday during the past several years.
The pricing pressure had doomed AOL’s ad growth to 16 percent, from nearly 40 percent over the past few quarters, while online ad growth at the Washington Post declined to 11 percent in Q2, compared with 36 percent in the same period in 2006.
"People are still buying display ads, but they are buying them elsewhere and for less than if they bought them from AOL or Yahoo!," said David Card, Jupiter Research analyst in a New York Post article.
The newcomers, such as Facebook, MySpace, and YouTube, are getting benefits in this shift.
"Advertisers have shown a willingness to embrace ad exchanges and ad networks offering inventory at lower rates," said Darren Chervitz, analyst for the Jacob Internet Fund, in the Post article.
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