Online Advertising Growth Is Slowing

Gordon Macmillan from Brand Republic has noted that online newspapers are reporting their advertising revenue is not looking as good as it once was.

“We absolutely see slower growth coming,” says Kip Cassino, vice-president of research at Borrell Associates, a media-research firm. “Generally, newspapers tend to believe things that have been good are going to get better. And that’s not always the case.”

A possible cause is that advertisers are looking to spread their spend across more sites and are also moving away from the traditional players, towards the likes of facebook and myspace. This, coupled with the continued growth of paid search – a sector that only Google, Yahoo and MSN can play in – means bad news for online newspapers, and possibly traditional media online in general.

A friend of mine who works for a big online advertising player recently commented that “advertising revenue should just be the icing on the cake” and that too many publishers are relying solely upon ad revenues in their business plans. Newspapers do have other sources of revenue – unfortunately the Classifieds market is in a much worse state…