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the online advertising market

Filed in archive Entrepreneurship by tj on May 4, 2004

There has been so much buzz about the Google IPO in the last days, you might be pretty bored about. However the Economist has a rather pessimistic point of view of Google's chances to grow. In most points I share the authors notion, I find Google is an over-valued asset with the prospective billion dollar valuation.

"In search, Google is now vulnerable because the barriers to entry to its market are low. This is the big difference between Google and eBay, the firm held up by the bullish analysts as a valuation benchmark. The auctioneer keeps ahead of rivals due to "network effects" that draw traders to the most liquid market, whether in shares, cars or second-hand junk. In search, network effects do not apply. Hence, in the late 1990s, Google was able to displace the cognoscenti's engine of choice, AltaVista. Hence, too, Google may in turn be ousted---perhaps by a bright new upstart, such as Mooter, an Australian engine that draws on psychology to improve search results, or, more likely, by Yahoo! or Microsoft."
""The search advertising market is mature," says Mark Josephson, Kanoodle's marketing boss, adding that future growth can come only from placing sponsored links on the 95% of web pages that contain not search results but content. Google knows this. It is trying to use its algorithmslinks to crawl newspaper articles, web journals and so forth to identify their subject area and place "contextual" ads. Its problem, says Mr Josephson, is that "advertisers are not buying keywords anymore, they're buying topics," which requires a different approach. As Google spreads out from search pages, he says, its people are "getting further and further away from their expertise." In trying to morph into an operating-system firm or online ad agency, Google is less a leader than a novice."
That's exactly what we see over at Creative Weblogging while keywords are a smart idea and it will be a growing market for some years from now, it has become state-of-the-art for most companies (incl. bigger more conservative clients). So budgets may still rise for several years but we increasingly see advertisers leaving the hassles of hundreds of keywords and moving to a topic space that is tailored to their clients needs.






Permalink: the online advertising market
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