A projection released today by the Yankee Group says the coming years will bring more of the same: double-digit year-on-year growth in online advertising spending through 2011, when the overall market is projected to reach $50 billion. People continue to move their time and attention online, and online ad spending has been following closely. The story for the past few years has concentrated on the search for inventory: contextual ad networks battling for big publishers, Google making forays into print and radio, and enormous valuations for big Web 2.0 sites like Facebook and YouTube where people are spending hours on a day.

But are we headed for a bubble?

The head of advertising giant Publicis, Maurice Levy, recently commented that the valuation of Facebook was absurd, saying “Far too many people are building plans based on advertising, and they may well be disappointed because there is not enough money for everyone.” Similar sentiments were expressed as the Web 1.0 bubble reached its peak, and the overreliance on banner ads as the basis for lofty valuations came into question.

A pessimistic view could be expected by the head of an advertising agency that has a far larger stake in traditional media advertising than it does in online, but he did concede that online advertising would continue to grow strongly, at the expense of traditional media advertising.

But are we turning a corner, in which online advertising, much like real estate these days, is turning into a buyer’s market rather than a seller’s?

Google, not surprisingly, has not dropped the ball when it comes to courting new advertisers. has not given up on the local market, often considered the largest potential market for contextual advertising but also the hardest nut to crack. It recently launched a contest for business school students to crowdsource ideas on how to reach potential local advertisers. So far 724 teams have signed up to get $200 worth of AdWords spending to work best for local merchants who have a Website but who haven’t tried advertising online. Winners get a week-long trip to Mountain View to rub elbows with the Google crew.

Not a major strategic move, for sure; just another suggestion that with other contextual ad networks peeling away its market share, Google will continue to have to demonstrate its value to would-be clients.

This entry was posted on Wednesday, January 23rd, 2008 at 5:17 pm and is filed under Online Advertising. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.