Peak Google and the limits of internet advertising

The warning that online advertising revenues may have hit their limits has huge consequences for the internet industry.

newspapers are dying as the media business models move online

Last week, Google’s share price slumped on news of poorer than expected revenue results and website Asymco has a detailed examination of how the company’s growth might have reached its limits.

Asymco’s warning to the online advertising industry is clear with the warning that revenues might start to decline in 2016.

That online advertising may have reached its peak means even an even more uncertain future for businesses rely on those revenues, and times have been tough for those sites in recent years as returns have fallen.

At the same time online ad spending seems to be peaking, print advertising revenues in the United States dropped a further 8% last year with income at now at 1982 levels. It seems publishers can’t win either way.

So its now wonder that online services like Google and Facebook are looking to payment systems and other ways to generate revenue, for online publishers things are even more problematic.

What is clear is the advertising driven revenue methods that work so well for the broadcast industry aren’t working for online publishers and quite possibly other internet based businesses as well.

The online industries need a David Sarnoff to figure out a model that works.

 

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Author: Paul Wallbank

Paul Wallbank is a speaker and writer charting how technology is changing society and business. Paul has four regular technology advice radio programs on ABC, a weekly column on the smartcompany.com.au website and has published seven books.

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