Fast Forward: Tech Giants Scramble For Bigger Piece of Growing Online Ad Market

http://knowledge.wharton.upenn.edu/article.cfm?articleid=2016

No matter how the drama unfolds, advertising executives still might want to focus on getting more web savvy. The traditional, offline ad business is mired in a funk, as noted by the Advertising Age headline. Meanwhile, as the two IDC studies noted, all forms of online advertising revenue are expected to surge over the next several years. Indeed, part of Yahoo's rationalization for the Google hookup was that it will more efficiently deliver display ads, or ads with an image element, when they perform searches for their favorite topics. The agreement with Google "will strengthen our competitive position in the convergence of search and display," Yang said in a conference call with investors.

So if the U.S. economy is in such bad shape, and print advertisers are hurting, why has the online market until very recently not shared in the pain? "What happens is that the current economic crisis puts pressure on advertisers to save money and find more effective marketing channels," says Karsten Weide, IDC's program director for digital marketplace and new media. "Effectively, the crisis accelerates the shift of advertising budgets from traditional media into new media."

Wharton economics professor Devin G. Pope looked, not at spending, but at numbers of ads and effectiveness during his research into the impact of Craigslist, the online classified ads service. Pope and University of California Berkeley collaborator Kory Kroft found that the online classified ad site Craigslist, where it was available, reduced by nearly 10% the number of newspaper classified job listings between 2005 and 2007. "It not only crowds out those classifieds, it appears to be more efficient," with significantly shorter listing periods for the Craigslist ads versus the newspaper classified ads, Pope says. For example, rental vacancies for Craigslist-listed apartments were shorter than those not advertised on Craigslist.