Online ads — nature abhors a vacuum

by Mathew on November 15, 2006

Lots of chatter today about the stats on online advertising. In a nutshell, they grew to $4.2-billion (U.S.) in the third quarter, up 33 per cent over the same period last year. That had some — including Netscape supremo Jason Calacanis — crowing about a new Golden Age of online ads, while others urged caution, since the ad figure is a measly 2-per-cent increase over the immediately preceding quarter.

You see this kind of thing in stock-market coverage all the time: Google’s profit rose 892 per cent over the prior-year quarter, so that means BUY! But Google’s profit only rose 38 per cent over the preceding quarter, so that means… er, BUY! Well, you get the idea. The point, of course, is that advertising is moving inexorably online. As Froosh points out, whether that shift continues in the kind of straight-line way or with some bumps and valleys, it will increase.

ad spending.jpg

It has to increase, because nature abhors a vacuum — and at the moment, the gap between the proportion of ad spending that is devoted to online and the proportion that goes to offline markets is huge. That gap is effectively a vacuum, and so Aristotle’s dictum holds true. Either people will stop spending so much time online, or advertisers will increase their spending.

I would bet on the latter. And as my friend Paul Kedrosky suggests in his post on the subject, I wouldn’t want to be placing my bets on any of the existing media sources that will be the losers in that particular equation.

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