Here is an interesting calculation that goes square
against the "common sense" of the last few years that
ad revs are dropping. In fact ad revs per unique user
are going to head sharply upward as time goes on. Based
on this, revenue (and profit) growth for B2C companies
should not be an issue.
-------------------------------------------------------
"This is computed from available market research as follows: I've taken a weighted
average of online population growth from CyberDialogue, IDC, and Jupiter
Communications to arrive at the following estimates for online population:
1999 83.6M
2000 99.5M
2001 113.6M
2002 128.3M
2003 143.7M
Then I've taken estimates of online ad spending across online advertising formats
from the August 1999 Forrester Research report entitled "Internet Advertising
Skyrockets," as follows:
1999 $3.3B
2000 $6.5B
2001 $10.9B
2002 $16.6B
2003 $24.1B
These estimates were (IIR) derived by Forrester by polling a large number of
companies that either currently have online advertising budgets or who are larger
real-world advertisers and extrapolating from their existing budget growth
patterns and online spending plans. Sorry, can't do better than that as a ref;
don't have the report in front of me, just my roll-up spreadsheet. BTW, there is
a more recent March 2000 report by Forrester that deals with the same space, but
these figures were calculated back in the fall and I haven't had any reason to
re-examine the assumptions. (I.e., it's futile to even use the word "advertising"
around VCs these days, despite what those pricey analysts are saying. ;-)
If you don't have a Forrester subscription, you can probably find similar but
secondary data at i.e. Iconocast and perform the calculations yourself.
iconocast.com
Then it's simple math: divide the estimates for spending by the population
estimates to obtain the following per-capita online ad spending figures:
1999 $39.46
2000 $65.36
2001 $95.97
2002 $129.38
2003 $167.68
So I was a bit off, but I was quoting from memory.
Now, the best attack against that argument is that the Forrester poll and report
were done prior to the "bubble pop" earlier this year; OTOH, the primary research
and the report preparation were *also* done *before* the enormous rise in Q4 / Q1,
so the data probably represents less "hype" than it might otherwise. Even so,
even assuming the slope is way too steep, the fact remains: the trend is upwards
for online ad spending. If it's not 4-6x, it's entirely reasonable to assume
2-3x. It's true that banners are being devalued, and the banner distributors are
shifting from CPM to CPC accomodate that; it's also true that over time the "big
dogs" will benefit the most from increased ad spending as their userbases and
therefore the cost of using them as an advertising channel grows."
[taken from a mailing list I'm on] |
