Skip to main content

Thoughts on Revenues from Online Advertising

These days, a lot of content on the internet as well as other media is being provided for free with the belief/understanding that revenues from advertising will cover the cost for producing and disseminating the content. That led me to wonder about how much money is really in advertising to sustain the media industry. As usual, I did a quick search on "advertising cost" and "advertising GDP" ... etc and came up with a wealth of information.

Let me start by answering question "how much money is there in online advertising?" According to the all-knowing Wikipedia, advertising as a % of GDP is about 2.2% (~$250-$300 billion) in 2007. The number we are most interested in is online advertising revenue which was about $21 billion in 2007, according to a TD Pricewaterhouse report.

Google by itself claims to have generated $10.5 billion from advertising in 2006. So, does the other $11-15 billion pay for producing and distributing much of the free content on the web? I don't think it can.

It appears the cost of online advertising is pretty cheap compared to other more traditional media because of its impact and/or reach (or the lack thereof). My hunch is that lots of the advertising money still goes to more traditional print media and TV, as reflected by the $21 billion the internet gets which is less than 10% of the money spent on advertising ($250-$300 billion).

I am sure the numbers ultimately add up, there must be some information I am missing or some concept I am misunderstanding/overlooking. Well, so much for my random thoughts ...

Here is a little info about the cost of different ad media.

Average Costs for Advertising (Prices reflected are negotiated prices for a 12-week campaign):

  • Newspapers – $1,300 per week for 2” x 2” ad
  • Television – $200,000 for one 30-second commercial (during prime-time)
  • Direct Mail - $1,500 for 1,000 4x6 postcards (includes postage)
  • Radio - $90 to $120 per week on a rotator (prices higher if time slots for ad are selective)
  • Magazines - $1,200 to $5,000 per month or per issue (depends on ad size and demographics)
  • Outdoor (billboard) - $3,000 to do artwork and install media on billboard; rates depend on impress level, ranges from $5,000 to $500,000 (the higher the qualify of the artwork and the larger the demographic group, the higher the price); minimum contract is 16 weeks
  • Online - $0.60 pay-per-click or $1,200 - $1,800 a month for aggressive campaigns (does not include search engine optimization) or $200 to $1,200 per year per banner ad on websites

Comments

Post a Comment

Popular posts from this blog

Slow Acroread Startup in OpenSuSe 11.0

It takes more than 30 seconds for acroread to load on my Opensuse machine the first time and the startup time gets shorter in subsequent attempts. Why? This is not the first time I have come across this problem of slow application startups in OpenSuse. Apparently a lot of people had encountered this problem and they found a simple solution - uninstalling the version of acroread that comes with OpenSuse and installing one from Adobe site yourself. Fortunately, that prescription seems to have solved the problem. My acroread startup time is a few seconds now. Why does a very good Linux distribution like OpenSuse with its wide support and following make so many of these mistakes?!?! Over the years, I have seen Suse/OpenSuse sending buggy distributions that make you wonder if they do much testing before releasing their distro. Here are a few bugs I have come across: The extremely slow startup of Openoffice in OpenSuse 10.0 was one of the reasons I switched to Fedora Core for a while...
1 comment
Read more

Online Storage Solutions

Problem: I often need to have some files readily available online so that I can access them from any computer. There are many ways to go about solving this problem and each comes with its set of shortcomings: Yahoo! Briefcase - 30MB limit Online storage services like Box.net, Xdrive, MediaMax - usually cost money; signing up is cumbersome Email to myself as an attachment - enough said there It's time to find a home-made solution. The solution I am about to suggest is intended for -- A *NIX user someone with access to a *NIX web server Solution: I am a linux user and I have user level access to a web server. The web server is configured such that the public does not have access to directory structure. So, I would need to write a script that copies my files to the web server and creates an index listing my files. Password protection of the storage would follow after that. Client Side: Use the following script to transfer file to server, make the file readable by public and execu...
Post a Comment
Read more

Tax-and-spend Liberal My Ass

This is a continuation of my earlier posts on economic performance of democratic and republican administrations. My earlier posts include: Politics of the Federal Minimum Wage Democrats Have Kept Unemployment Low Democrats care about poor people Truth About Economic Performance of Political Parties I like to think I have shed light on some facts and debunked some conventional wisdom. In this post, I will attempt to examine the tax-and-spend liberal label put on democrats. Republicans often try to label democrats as tax-and-spend liberals who are soft on national security. While the latter point is based on anecdotal evidence, the earlier is amenable to empirical examination. So, I set out to prove or disprove the notion that democrats often tax and spend in a way that does not yield economic growth. The implication of tax-and-spend liberal is one that puts excessive tax burden on its population and finds inefficient (think socialistic) ways of spending that tax reven...
Post a Comment
Read more