In a recent article titled “Online Ads: Even the Evangelists Turning Bearish“, TechCrunch reported on figures from the Wall Street Journal that online advertising was no longer growing, but is in instead expected to contract for the first time since the 2001 bursting of the dot-com bubble.
While the market has been steadily growing at double-digit numbers for the past few years, the expectation for 2009 is a 5% contraction in revenues. This spells serious trouble for lots of websites who were relying on ever growing online revenue projections to make their financial forecasts work. What will the investors say now that the market has turned on itself and those forecasts become unrealizable ?
Sarah Lacy, the author of the article, has a good suggestion for getting out of this mess : “How about actually coming up with innovative advertising products?”. Haha, we couldn’t agree more. The advertising space has lacked almost any kind of innovation with pretty much the same models today as we had 8 years ago. Reading through the comments on the article is even more interesting, because although lots of people agree that there needs to be more innovation, nobody actually provides any solutions.
Well in our minds the solution is very obvious - replace the ads with e-commerce widgets. This seems to us a much more effective way for sites to monetize their traffic compared to low paying text or banner ads. Our prediction is that within the next two years, a majority of content sites, portals, social networks and perhaps even google itself will start displaying contextual widgets rather than ads on the side of the page.
By the way : we are rushing to get the public beta of our widget out in the next 10 days so check back here soon for more info.
