Monday, February 28, 2005

Slowdown in Internet Advertising?

Shares of Yahoo and Google were downgraded on the 24th February by an analyst of Caris & Co. citing a slowdown in paid advertising. Yahoo, Google and Valueclick (vlk) were all hit hard.

What is paid advertising? It is a form of online advertising where Ads appear on search result pages returned by a search engine and the advertisers pay based on the number of clicks. For example, when you search for the term 'Ipod' with Google, it would return a list of websites containing various information on the Ipod. However, on the right side of the page are a list of paid advertising. When you click on the links on those links, the advertisers pay Google. Advertisers buy keywords from Google to have their Ads appear.

Some say paid advertising had reached a bubble top in late 2004 with companies such as Ebay and Amazon buying large numbers of keywords. I suspect that the slowdown in paid advertising is only temporary. Paid advertising is one of the most effective forms of online advertising currently available because it is essentially a pay-as-you-see-results system. Advertisers can theoretically pay nothing if the search engine do not bring potential customers to their doors. Online advertising is going to continue its growth after this short slowdown. This creates a great opportunity to pick up some shares of Yahoo and Google while they are beaten down.

Happy investing!

I'll leave you with a good book I've read with an excellent chapter on Yahoo and their advertising businesses:

24 comments:

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Anonymous said...

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Anonymous said...

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Anonymous said...

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If you do not mind I will snag your blog and put it in my favorites. I read a ton of stuff on here that interested me. Keep blogging away :-)

Anonymous said...

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If you do not mind I will snag your blog and put it in my favorites. I read a ton of stuff on here that interested me. Keep blogging away :-)

Anonymous said...

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p.s some very good points on your blog

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blog to my favorites list so I can come back later on and read some more stuff. Well I guess I should get back to researching commercial web hosting.
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Anonymous said...

Hey Investment owl. Very nice blog :0) I just got inside from washing and waxing my truck. It is my baby. Took me 2 hours though. So I settled down into my basement and started doing some web surfing. Anyways I am in the process of grabbing my masters degree and have spent the last 6 months researching net web hosting. In the midst of my surfing I landed smack dab in the middle of your blog. I hope you do not think I am intruding but I must say it is great blog. Even though Slowdown in Internet Advertising? is way off base from net web hosting I found myself cruising through your blog archives for the last half hour :0) You have some nice blogging friends. Anyways, I need to get back to my mission. I wrote don’t your url and feel free to visit me here at net web hosting. I am so busy so I can only update my site monthly. Keep up the great work.

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Anonymous said...

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Anonymous said...

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Free Search Engine Submission Service.

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