The Decline of Google's (and Everybody's) Ad Business 313
Hugh Pickens writes "Rebecca Greenfield writes that during their recent earnings call, Google reported a 16 percent decline in Cost-per-Click (CPC), meaning the value of each advertisement clicked has gone down. This follows a 12 percent drop last quarter and 8 percent the quarter before that showing an unfortunate reality of online advertising — unlike the print world, internet ads lose value over time. The daily and stubborn reality for everybody building businesses on the strength of Web advertising is that the value of digital ads decreases every quarter, a consequence of their simultaneous ineffectiveness and efficiency, writes Michael Wolff. 'The nature of people's behavior on the Web and of how they interact with advertising, as well as the character of those ads themselves and their inability to command attention, has meant a marked decline in advertising's impact.' This isn't just Google's problem. Overall, Internet advertising has decreased in value over the years as online advertising continues its race to the bottom. 'I don't know anyone in the ad-supported Web business who isn't engaged in a relentless, demoralizing, no-exit operation to realign costs with falling per-user revenues,' adds Wolff, 'or who isn't manically inflating traffic to compensate for ever-lower per-user value.' For Google's overall business, this loss doesn't mean as much, since it has since expanded its business beyond AdWords — including its recent acquisition of Motorola. For companies that didn't just buy big hardware companies however, it's a scarier proposition. Like Facebook, for example."
I'll continue to use adblock (Score:0, Interesting)
And put these companies out of business (starting with Geeknet). Change is always good for an economy. It hurts the individual, but brings new opportunities to the whole.
So sick of being surrounded by people more fortunate than me. Everyone has some sort of large sum of cash or access to a large sum of cash through family. I have none of that. One fucking guy the other day actually less fortunate than me. Holding a sign at the intersection begging for money. I stopped and ate lunch with him. He had been out of work for several months. He appeared to lack an average level of intelligence, and that is likely the cause of his all his issues.
Re:Thank god (Score:4, Interesting)
Quite the opposite.
If each ad display has less value, maintaining revenue means being more agressive with advertisments.
Re:BEHOLD! (Score:5, Interesting)
Adblock: Tragedy of the Commons.
It's amusing to see the commercialized internet compared to "the commons".
Myspace tried that (Score:5, Interesting)
If each ad display has less value, maintaining revenue means being more agressive with advertisements.
Myspace tried that. That didn't end well. It didn't work out well for Yahoo, either.
Facebook is trying it now. That may not end well. One clear implication - Facebook stock is hugely overpriced. Based on current revenue, Facebook is worth about $7 per share. The stock price assumes a huge growth in revenue. Probably not going to happen. Even a slow decline in Facebook's revenue means the glory days are over.
Ads on search results are worth far more than ads on other media. Ads on search results are presented when someone is actively looking for something in the relevant category. Ads on content are irrelevant interruptions.
Alternative hypothesis (Score:5, Interesting)
This follows a 12 percent drop last quarter and 8 percent the quarter before that showing an unfortunate reality of online advertising â" unlike the print world, internet ads lose value over time.
Or, alternatively, print ads were never really all that successful, but unlike on the Web, there was never any way to measure their efficacy with much precision.
Re:nobody ain't got no money anymore (Score:5, Interesting)
Re:BEHOLD! (Score:4, Interesting)
I don't have Adblock on my computer. I have adblock in my head, and mentally don't see them (unless it's some girl with naked breasts). Ads on radio and television are more effective than web, since I can't skip those and am forced to listen.
I've noticed some websites are adopting the TV/radio model but forcing you to watch a 15 second ad before reaching the actual website. My concern is that websites might start charging money to view them (see Hulu and the shows they hide behind a $7 paywall). I'd rather have free ad-based internet than a pay-to-view internet.
Re:nobody ain't got no money anymore (Score:3, Interesting)
Now, while doing personal searches or ads on a general webpage? Largely useless.
The only successfully ad company is Amazon (Score:5, Interesting)
The only successful targeted internet ad company that I know of is Amazon.
I've bought hundreds (thousands?) of dollars of stuff based on recommended items. I forget exactly how they phrase it but its something like "people who bought your Charlie Stross book "Rule 34" also bought the following books" and they list Accelerando and The Apocalypse Codex and so on. Ditto about a zillion other authors and non-book products.
I've never intentionally clicked on or purchased anything from any other targeted ad, and have been using ad blockers since weeks after that tech was invented.
The scary part is thinking about what really finely focused /. ads would push on us /.ers. Hmm. Instant Hot Grits, Debian install disks, buy this package at a discount: one cup now with pix of two girls, lots of rick astley / rickroll music...
Re:Thank god (Score:5, Interesting)
You give yourself and human brains too much credit. It doesn't take that much to get into our subconscious, and into our decision making process.
http://www.youtube.com/watch?v=ZyQjr1YL0zg [youtube.com]
Obviously, this Derren Brown video is a little dramatic and not very scientific, but the fact remains that we humans draw a lot of our "spontaneous" creativity and "rational" decisions from our surroundings. You may think that you're immune to the effect, but regardless of the amount of truth in an ad for ACME brand frozen lasagna, the fact that Morgan Freeman is telling you that it is delicious and nutritious will have an effect on your decision 3 months from now when you're deciding which brand you trust more.
And imagine how susceptible kids are.
Re:nobody ain't got no money anymore (Score:4, Interesting)
I've never had anyone say they had ever.
And I once had an argument with an uncle that insisted that there are no ads on Google at all.
In fact, 45.5% of people cannot identify ads on the google search results page:
http://venturefizz.com/blog/war-free-clicks-think-nobody-clicks-google-ads-think-again [venturefizz.com]
Re:BEHOLD! (Score:4, Interesting)
A content-filled and freely-accessible Internet is a resource that the whole community benefits from, and yet Adblock drives up the real cost of having that content and accessibility.
Just FYI, Adblock is working with advertising companies to permit non-intrusive advertising [adblockplus.org]. They don't allow very many [adblockplus.org] at this point, but the feature is implemented in the current version of the software and enabled by default; they are working to build a process for handling the exceptions list.
I say all this because the popularity of Adblock was driven not by a blanket hatred of online advertising, but by the aggressiveness with which some players tried to overtap the market for eyeballs. E.g. your fellow advertisers played a role in precipitating this because they used pop-ups, overlays, flashy animations, and other gratuitous elements to outshout you.
I'm not saying the world is a fair place or that Adblockers such as myself are perfectly in the right. What I am saying is that the web-centric approach is a great equalizer: customers have more choices in how they consume content, and content producers can't impose the same 33% ad content that cable TV does*. (It's also a great equalizer for little guy content-producers, who no longer have to own a media empire to put compelling content out there.)
(*I made up the 33% number... that's just my estimate based on watching the clock a few times, and it doesn't include ticker ads, corner overlays, or product placements. Would love to see the actual data for cable TV in various markets.)