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

Correlation Between Taxes and Social/Economic Programs

I have always wondered if the taxes people pay correlate with the availability of social and economic programs and safety nets, not to mention the military programs that protect them. This idea comes in light of the notion that Europeans are highly taxed compared to their American counterparts, but they seem to have access to free (or almost free) education and health care while the US provides neither. The Europeans live and work at a more leisurely pace than Americans and they have the comfort of knowing that their government has put safety nets in case a disaster. The Europeans do a lot to ensure that all their citizens have comparable opportunities, and thus you are less likely to see a huge gap between the poor and the rich. Perhaps the lack of incentive to excel has stifled entrepreneurship and innovation in Europe to some extent. In fact, Europe has historically high unemployment rates than the US and the size of government there is significantly larger than that of the US....
Post a Comment
Read more

Microsoft Gone Wild

NBC and Microsoft have formed an intricate partnership in which Microsoft serves to expand and maintain NBC's presence in the online news and entertainment market while promoting its products. NBC online integrates many of Microsoft's products. MSNBC is co-owned by GE's NBC universal and Microsoft. I have no problem with the partnership, except for the way Microsoft pushes people to use Microsoft products while other alternatives do just as well or better. Let me provide some examples. You can't access NBC online videos unless you have a Windows media plugin. What about using Flash like everybody else. If you want to access Olympics games online at NBC Olympics, you better be using a Windows or a Mac because Microsoft does not have a Linux version of the Silverlight plugin that it is pushing hard in competition with Adobe Flash, the industry standard. Suppose you are using Windows, you pay a huge penalty for not using Internet Explorer!! Try watching videos with In...
Post a Comment
Read more

Victim of Asylum Roulette

Not too many stories resonate with me as much as the plight of legitimate asylum seekers whose desperate plea to find refuge in the US is ultimately decided by the questionable preference, judgment and mood of a single asylum officer (with some oversight from a regional asylum director) on one fateful day. That decision, according to numerous credible and through studies, depends largely on the location of the regional asylum center, the legal representation of the the applicant, the gender of the asylum officer just as much as the merit of the asylum case, while in fact the legitimacy of the asylum case should be the only relevant factor. This phenomenon has become so real that researchers at the Georgetown University law school have dubbed it the Refugee Roulette . Why am I so sensitive about this subject? My most devastating tragedy of late has been the denial of my legitimate and honest application for political asylum at the Chicago Asylum Office. When I applied believing the ...
2 comments
Read more