Advertising is a bubble. If that’s a true statement, Google is a bubble too. And if that’s true, many of the goods we take for granted on the Web are at risk. Let’s run down some evidence.
Because trees don’t grow to the sky
6 responses to “Because trees don’t grow to the sky”
I Disagree. Investing on Ads will bring you people to your store that probably interested and most of them showed up when they see your ads. This is name recall.
Sorry for giving such an unfriendly comment. I had read your article and maybe you have a point. but giving free doesn’t mean wasting resources. it just that everybody just can’t have enough and they don’t realize that they are paying and will pay for the niche which like themselves enjoy the concept of free advertisement. I hope this doesn’t confuses you. 😉
We hear repeatedly that Google is an advertising company, but that does not mean its primary source of income need be traditional advertising, nor that a fall-off in banner advertising revenue need be particularly troubling for the company. Google doesn’t just sell ads, it sells connections.
It’s a convenient portal to other portals–at which the product advertising, decision support, and commercial transactions take place. Aggregation sites like buy.com and retailers pay to play on Google, and what they pay for is the referral, more than the promotional messaging of banner ads. I think there will be a place for that service for a long time to come, and at the present there’s little direct competition from social media—even if Facebook and the like are where more people spend more time than on Google’s search page.
An article by Ben Evangelista appeared in this morning’s San Francisco Chronicle, headlined “Facebook directs more online users than Google.”
Some key paragraphs from the article:
“According to Web measurement firm Compete Inc., Facebook has passed search-engine giant Google to become the top source for traffic to major portals like Yahoo and MSN, and is among the leaders for other types of sites….
“Some experts say social media could become the Internet’s next search engine.
“People are spending less time navigating the Internet on their own and are now navigating the Internet based on their friends’ recommendations or their friends’ activities,” said Dave Yovanno, chief executive of Gigya Inc., a Palo Alto firm that offers social-media services.””
Seems to me, though, that the “directing” that is going on via Facebook is more about the impulse browsing experience—for entertainment, news, and opinion—than about purposeful shopping. Certainly many more people use Google as a gateway to sites for specific products, product reviews, and deals than use Facebook or any other social media site.
General social media sites, like Facebook, aren’t organized in a way to facilitate match-making between supply and demand. They are certainly platforms for influential voices and recommendations, and that’s an important consideration for marketers—and why marketers are falling all over themselves to figure out how to “use” SM. (I believe they ought to think of SM, though, as more a public relations/conversation medium, than an advertising one.)
Sites such as Yelp.com apply social media to local business reviews and may contribute to the decline of newspaper advertising. But they seem to me to be secondary sources—connected to consumers through Google searches more often than not. It would be interesting to see how much direct traffic Yelp receives, versus how much comes through Google.
Google was set to buy Yelp for a reported $550 M, a deal which seemed to be a nice fit and an easy way for Google to muscle into that sort of ad revenue, but the deal fell apart and Yelp has subsequently announced a large investment from Elevation Partners. We shall see what Google does next.
Many of those hungry servers you reference in your article could certainly be fed by a Google-branded Yelp-like site—if not by a Google-owned Yelp.
In short, the declining performance of banner ads is no reason to think that Google’s revenue stream is in trouble. True, nothing lasts forever, but there are lots of tributaries to the advertising river, and Google is adept at sucking them up.
I’m sure this doesn’t confuses you.
(see the article at: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/02/15/BUU51C0AMN.DTL#ixzz0feD55X57 )
I believe investing on advertisement is necessary and if commenting on blog is to be seen as only mere advertisement, this won’t lead to any further discussion with members in here. I think you should allow mere discussion to go further on this blog.
Great article. I expect that Google, in the not to distant future, will become the largest phone company in the world. IF they pull that off, phone revenue will pay for the server farms. WiMax, and LTE are the enabling technologies needed for this paradigm shift.
Trees do not grow to the sky, but consider the ground hugging invasive species: KUDZU. Growth does not have to be up, as there are at least 2 other dimensions available.