

Ask HN: Is the online advertising really this small of a market? - 3pt14159

I've been trying to build my understanding of the internet economy so I've been researching various economic angles. Online retailing, SaaS apps, content sites, etc. Then I came to online advertising. I just cannot believe how small of a market this is: $22B for the US market last year. This seems astronomically small. Warren Buffet is worth twice that much.<p>I'm starting to think that I'm <i>too online</i>. That I incorrectly assume there are way more people like me online and doing more than just YouTube watching, Facebook browsing and email.<p>It's also possible that I'm not truly visualizing just how much money 22 billion is, but I remember that the around ten years ago the Pentagon announced they had trouble tracking 2 trillion dollars, so I can't be too diluted.<p>Am I missing something?
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byoung2
I think part of it is that internet companies are like celebrities...they're
sexy, so they get a lot a lot of attention. Just like that shy girl from Texas
who took a chance and made it big in movies, companies like Google who made a
fortune out of bits and bytes capture our hearts more than conglomerates,
shipping companies, oil companies, or banks. These are the companies that
actually make money when ads get clicked.

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seaotter
I honestly think internet advertising has reached its peak and is going to
wane slowly downwards from here on out. There is no way someone can tell me,
what with Twitter, Youtube, MySpace, Facebook, and the whole gang, that Joe
Shmoe can't advertise himself and his company or products, and has to spend a
fortune for it. It might have been like that 10 years ago, but nowadays, you
can be famous for absolutely nothing.

Example: Some fellow films his cat lying with his paws up and snoring, and
narrating in the background that he's not as lazy when it comes to his
business. It's so funny that everyone starts looking at it - and thereby the
business being advertised. Viola. Free online advertising, and he reached
hundreds of thousands in an hour. :-)

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byoung2
Does that get people to pay him money for that service? I think there is a
growing market for _relevant_ online advertising that is largely untapped. For
example, mobile, location-based advertising (you just checked in near LAX
airport on Foursquare, here are rental cars and hotels in your area).

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seaotter
You misunderstand. Internet advertising isn't about getting people to pay for
your services.

It's about getting people to your front door. :-)

THEN you get them to pay for your services. If you've got a good website, and
you offer exceptional services/products, you're bound to get some customers
out of those visits.

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byoung2
_It's about getting people to your front door_

It's more about getting _quality_ people in your front door. That is, people
who are interested in whatever service you are offering, not people who like
cute cat videos.

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seaotter
I'm not so sure about that.

It's impossible to "monitor" who sees your online advertising if you scatter
it to the four winds of the web. :-) I was using the cute cats as an example
anyway. You can control a little bit of your marketing by targeting websites
that deal with your services, but if you rely on social networking places like
Twitter, Facebook, etc., it's just going to be a real mess.

Besides, isn't it more cost-effective right now to reach a lot of different
people for absolutely free - then to rely on expensive SEO hunts, and
targeting advertising to get the niche? :-)

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byoung2
_isn't it more cost-effective right now to reach a lot of different people for
absolutely free_

Not really free, since you have to spend time doing it.

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stonemetal
Stop for a minute and think about the ads you see online. I I pretty much only
ever see ads for companies that sell stuff online or companies that are tech
companies. Mom and pop shops may have a website or a facebook page, but they
aren't running ad campaigns. A quick google of Hamburger shows zero ads. Where
is the ad for McDonald's Burger King or that local hamburger joint I like so
much? A quick google for Soda shows a Dr. Pepper ad. Basically the only people
who advertise online are those who do business online or are somehow related.
It just isn't that big an industry because not that many people are online
enough to justify the expense.

~~~
byoung2
* A quick google of Hamburger shows zero ads*

For you...remember that online ads are targeted, so you'll see different ads.
I'm in Los Angeles, and I googled "hamburger" and got ads for Chili's,
Albertson's, Pavillions, and a few recipe sites. You'll see more local ads in
certain places like Los Angeles, San Francisco, or New York.

