It used to be that the premier advertising medium in the US could keep its place on top for a generation or more. Now that cycle has been cut down to years. Newspapers ruled the American market for more than a century. Radio was dominant for almost five decades. TV pulled ahead in the 1950s and 1960s followed by cable.
In just the last decade the internet has become the "hot" place for advertisers to put their money. First that investment went into big web portals like AOL. Then the flow of money moved to search engines with Google (NASDAQ: GOOG) out in front. It developed the reputation as the most efficient way to reach a multitude of markets and that built it into one of the most valuable companies in the world, based on market cap.
Now, Google's stock has sold off based on the concern that the growth in search advertising is slowing. Recent developments show that there may be more cause for concern. According to The Wall Street Journal, advertisers have started to move money to mobile platforms and social networks. The paper reports that "Pizza Hut is creating a promotion and buying ads through Facebook. While the Facebook ads aren't technically search ads, they are part of a broader effort to boost the company's profile in the nonpaid search results consumers get when seeking online information."
Social networks have been criticized for not delivering results as efficiently as those from search engines, but the fact that large advertisers are moving more capital to them represents a threat to the search engine business. In a recession, any dollar that moves to a new medium is a costly defection.
The period when search is one of the primary media for reaching customers is hardly over, but it looks like it already has some competition.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
1-20-2009 @ 10:02AM
David said...
Google is probably the biggest stock fraud perpetrated on the investing public. Nothing more than a ponzi scheme. The last people out of this stock will determine it's true value.
1-20-2009 @ 12:16PM
Daniel J Deyette said...
A ponzi scheme? Google's just the hopes and dreams of search engineers to make documents easy to find. Their non-stock investors simply saw Google's Adwords as a great way of monetizing this. Google has a lot more platforms than just search advertising and I think it's someone unfamiliar with search who wrote this article.
Google has many properties *including* some social networks and web 2.0 websites. If people think Google's advertising platform is strictly based on search they're uneducated.
Their content network spans youtube and other video sites, and they're now even advertising WITHIN every video on Youtube. They're doing videos, picture & text ads on millions of websites. That's not the search market.
Yes, a dollar moving off their cheque book to someone elses could hurt, but I don't think those advertisers are going to see value for those dollars and I don't think that people making money off Google ads, although they may try other things in addition to this.