The Decline of Google's (and Everybody's) Ad Business

Hugh Pickens writes "Rebecca Greenfield writes that during their recent earnings call, Google reported a 16 percent decline in Cost-per-Click (CPC), meaning the value of each advertisement clicked has gone down. This follows a 12 percent drop last quarter and 8 percent the quarter before that showing an unfortunate reality of online advertising — unlike the print world, internet ads lose value over time. The daily and stubborn reality for everybody building businesses on the strength of Web advertising is that the value of digital ads decreases every quarter, a consequence of their simultaneous ineffectiveness and efficiency, writes Michael Wolff. 'The nature of people's behavior on the Web and of how they interact with advertising, as well as the character of those ads themselves and their inability to command attention, has meant a marked decline in advertising's impact.' This isn't just Google's problem. Overall, Internet advertising has decreased in value over the years as online advertising continues its race to the bottom. 'I don't know anyone in the ad-supported Web business who isn't engaged in a relentless, demoralizing, no-exit operation to realign costs with falling per-user revenues,' adds Wolff, 'or who isn't manically inflating traffic to compensate for ever-lower per-user value.' For Google's overall business, this loss doesn't mean as much, since it has since expanded its business beyond AdWords — including its recent acquisition of Motorola. For companies that didn't just buy big hardware companies however, it's a scarier proposition. Like Facebook, for example."

Comments

BEHOLD!

[Moheeheeko]

Adblock: Savior of the Internet.

Re:BEHOLD!

[Sarten-X]

Adblock: Tragedy of the Commons.

Re:BEHOLD!

[0123456]

There were plenty of free sites on the Internet in the 90s when few people ran ads. Many of the were better than modern sites because they didn't have the desperate need to bring in more users to make more money from those ads.

And that was when a hosting account cost far more for far less than you get for the same price today. Of course every page didn't include a megabyte of Javascript crap to 'Web 2.0'-ise it.

Re:BEHOLD!

[Sarten-X]

And why is that amusing? A content-filled and freely-accessible Internet is a resource that the whole community benefits from, and yet Adblock drives up the real cost of having that content and accessibility. Sure, there would be some content without ads, but it'd be limited to corporate-sponsored subconscious marketing endeavors, personal philanthropy, and whatever society can produce in its spare time after paying the bills.

Good

[Hatta]

The internet had plenty of good content before it was ad supported, and it will have plenty of good content afterwards. Come to think of it, the content was actually better before it was add supported.

I continue to wonder...

[Covalent]

...who clicks on ads? The only time I click them is by mistake and then in frustration I close the new window, usually before it loads. My value per click is $0.

Re:Thank god

[justforgetme]

Only if you are a logical person. The teams of accountants running big Internet outfits that are dependent on advert revenue just see this as a que to "Hey! There's a spot we haven't put an ad on!".

Honestly though, from personal experience, redefining your ad strategy to something much more minimal, elegant and integrated seems to be working atm. The Plain advertisement times on the net are over. Now it seems to be all about social recommendation. (Which is nicer IMHO)

Re:Myspace tried that

[TheRaven64]

I stopped reading there. What magic do "real pro financial analysts" have which slashdotters do not have?

They can convincingly spout bullshit.