Listening to Gawker Media overlord Nick Denton’s predictions for the coming online-media apocalypse, I’m reminded of the story about the boy who cried wolf. That said, however, it’s worth remembering one thing about that story: In the end, there actually was a wolf. And as he describes in a post on his personal blog, complete with scary charts and graphs about projected advertising demand, Nick is convinced more than ever that there is a wolf at the door — and a pretty damn big one at that. How does a 40-per-cent drop in online-advertising revenue sound?
There’s much sturm und drang about online advertising, and whether it’s in a big hole or a *really* big hole. Judging by the graphic of a giant smoking crater he used for his post, Peter Kafka at All Things D apparently falls into the latter camp, and he also quotes Nick “The Dark Lord” Denton as saying that anyone who doesn’t expect ad rates to fall 40 per cent is an idiot (although, to his credit, Peter does note that Denton is always saying things like that). But one of the reports that everyone is using for fodder, which comes from the Rubicon Project, isn’t that bleak at all.
If anything, in fact, the Rubicon report indicates that online advertising is still growing relatively strongly despite the turmoil in credit markets and the slump in stock prices, and could even benefit as advertisers look for more quantifiable results for their spending, which online ads provide. The report also says that while overall ad rates tracked by the network dropped 11 per cent in the quarter:
It’s one thing to turn a blind eye — as some networks do — to the uploading of pirated content that occurs daily on YouTube, MySpace and other social networks and services. To use one potential metaphor, it’s like the approach that some countries take to prostitution or marijuana: They know it’s out there, but as long as it doesn’t cause any trouble then they’re okay with it. It’s quite another thing, however, to do what MTV is proposing to do, which is to actually place ads alongside the content that is being infringed. That’s like legalizing prostitution or marijuana use and taxing it.
According to an announcement today, MTV has teamed up with MySpace and a company called Auditude to do exactly that (I mean sell ads next to copyright-infringing videos, not legalize prostitution and marijuana use). Theoretically, that means the network — and MySpace — could benefit any time someone uploads a clip from The Colbert Report or South Park or a music video, based on the advertising that Auditude inserts into the clip. As the LA Times story notes, YouTube rolled out similar technology earlier this year, giving copyright holders the option of monetizing their content rather than removing it. And some are taking that offer.
As more than one person has noted, the approach that MTV Networks is taking seems a little ironic, given that its parent company Viacom is still suing Google for $1-billion in a long-running copyright infringement case. Will that kind of lawsuit go away, as more content providers try to monetize their content wherever it appears, rather than suing to have it taken down? I hope so. What if Auditude or YouTube offered its identification technology as an open API, so that video clips posted by people like me could include ads? I think that would be a great solution. Bring it on.
As the markets see-saw between concern and outright panic over the fate of the U.S. financial bailout, the credit shock that’s rippling through not just North America but most of the Western hemisphere, and the potential for a severe economic downturn, anyone with a Web-based business that depends on advertising has to be asking: Is this the beginning of the end? If the U.S., Canada and to some extent even Europe are in the depths of a recession (or possibly even worse), what does that mean for online ad spending? The answer could mean life or death for some startups.
This debate has been going on for almost a year now. Google’s stock price came under fire around the end of last year and the beginning of this year because of concern that the search giant might see a downturn in ad spending that would hit the bottom line. Has it? A little, but not a huge amount (although some say that could change). In fact, there are those who argue that search-related ad spending is likely to be the most durable even in a shaky economy — in part because businesses can get more bang from buying AdWords than a newspaper ad or TV spot.
As a reader, and as someone who cares about online media in all kinds of other ways, I would like to second the opinions that David Churbuck expresses in a post on his blog about “The blight known as Vibrant Media.” In a nutshell: those double-underlined links that generate pop-up ads or affiliate links to a variety of craptacular sites, which companies like IntelliText specialize in, are an abomination. They make your site look like ass, and what’s worse, they try to trick readers. As David says: