Internet Advertising: Why Less Is More

In A Sound Byte

"Oversupply is killing internet advertising"

In the virtual world there are very few limits. Unlike the real world, there is an almost unlimited supply of advertising space on the internet. With the number of web pages, email and other forms of internet usage (like web services) growing exponentially the number of spaces to take advantage of is enormous.

The problem is that the numbers of pairs of eyes in any one period of time that can see those pages is relatively finite. And although the number of internet users is rising, and the length of time those users spend online is growing there will still be a limit to the exposure that any target audience can receive. This is not a new problem, the traditional media also face the same limitations; but you would not reasonably expect someone living in California to read the London Evening Standard in the

traditional media, you might online.

Bean Counting

So the potential revenue from all internet exposure is finite. It may still be a very large number, but it is likely to grow only at the rate of population expansion. More content and therefore more advertising space is added to the internet corpus on any one subject every day, and so the growth of the advertising space is linear. At the moment Google reports an index of under 9 billion web pages, the average number of advert spaces per web page is around 2, which means that there are 3 advertising spaces for every person in the world at the moment.

The ROI of internet advertising is continually falling when you calculate it based on the average potential return per advertising space. But the revenue is not evenly distributed, my aunties holiday photo page and the Yahoo home page do not quite have the same advertising rates. The value of an advertising space is normally based on its capacity to provide exposure, i.e. the number of hits it gets. The

cost of an advertising space is normally the overhead of running the server which, although may be an order of magnitude different in some cases, is generally around the same for all sites.

The space providers (websites &

ad networks) are economically driven to charge (or beg for) a higher rate than their larger more traditional cousins. The advertisers are out to get the best value for money exposure for their hard crafted message. It is natural that they increasingly deal only with websites with higher traffic, leaving the small site or network of small sites without advertising.

Targeting was touted as the 'silver bullet' to save the smaller traffic sites, this is after all what the internet does well. In theory the targeted space provider can ask more for their service as the space will provide an increased

value proposition to the advertiser by showing adverts to fewer uninterested parties. In practice the overhead of researching the internet targeting strategy and finding the targeted spaces for a campaign is too great to make it worthwhile at the present time.