The real media consolidation: Google
Erick Schonfeld at TechCrunch and Ashkan Karbasfrooshan at HipMojo make critical calculations about Google’s growing advertising hegemony. Bottom line: Google controls nearly 40 percent of online advertising.
Now pair that news with the folding of TimesSelect. Consumers, as we used to be called, won’t support media and journalism with their money. Advertising will. We will become entirely dependent on advertising. And what happens when Google controls the majority of online ad revenue in this country? They’re headed there, for as a TechCrunch commenter points out, Google’s online ad revenue and share of revenue are growing faster than online advertising as a whole.
On the one hand, we should be grateful to Google for enabling the support of much new media. On the other hand, we should fear teh vice in which Google holds our privates. That’s where media power is consolidating — not in old conglomerates (some of which now depend for a good bit of revenue on who? — on Google.)
I’m not blaming Google for getting to this point. Big, old media handed them this opportunity on a platter. Google was the one company that truly understood the economics of the open network. It understood that it could grow much bigger enabling than controlling. We in media should have followed that model. We should have asked WWGD. What would Google do?
So what do we do now? We need new networks that identify and create new marketplaces for new value — greater value than the coincidence of words on a page, which Google sells. We need to create our own high-value networks (e.g., hyperlocal news). We need open networks that compete with the closed aspects of Google; openness is water to the witch of an opaque network like Google’s.
TechCrunch’s facts & figures, built on HipMojo’s calculations:
$3.98 billion (Google’s U.S. revenues in the first half of 2007)/$9.99 billion (IAB’s estimate of total U.S. online ad revenue in 1H07) = 39.8 percent.For the first half of 2006 the numbers are: $2.732 billion (Google’s U.S. revenues in 1H06)/ $7.9 billion (IAB’s estimate of U.S. online ad revenues in 1H06) = 34.6 percent.
Update: As one commenter points out below, this means Google is out-pacing the growth of online advertising by a wide margin. Total online advertising revenues grew 26.5 percent year-over-year, while Google’s ad revenues grew 45.7 percent.
Now ad in Bob Garfield’s chaos-scenario contention that ad spending as a whole will fall because companies will have more direct relationships with customers around media. I saw some things at Dell that back this up (more on that when my story appears in two weeks or so). Google will get an ever-bigger slice of an ever-smaller pie.
October 6th, 2007 at 11:38 pm
And when Google becomes too powerful and management cares more about stock prices then customer service, someone will figure out a way to do what Google does better. It’s the history of the U.S. economy.
October 7th, 2007 at 5:59 am
Isaac - or a government style MaBell breakup - till the tide (or another coalition) says time to re-consolidate.
Jeff - might be time to reinvestigate NetNeutrality & the HD television changeover. Seems the public is not snatching up the new wide sets giving ad agencies / networks worries over loss of audience share. NetNeutral in a tv over internet world (www.tv) is throwing another wrench into it all. Transmission carriers are at odds (again) with the FCC over the extended time frame (Feb’09) must carry analog and HD over fiber and air.
see ref:
http://tvtechnology.com/pages/s.0082/t.8838.html
imo - the HD signal progression was driven by BigBrother in a terrorized world. Content took a backseat to technology upgrades in the accounting dept. as the world got into YouTube and the likes on mini screens caring less about HD. Just in time for an obese American public to get back into recreation.
Tides and rip currents - what goes around comes around.
October 8th, 2007 at 7:16 am
[...] The real media consolidation: Google (by Jeff Jarvis) Erick Schonfeld at TechCrunch and Ashkan Karbasfrooshan at HipMojo make critical calculations about Google’s growing advertising hegemony. Bottom line: Google controls nearly 40 percent of online advertising. Now pair that news with the folding of TimesSelect. Consumers, as we used to be called, won’t support media and journalism with their money. Advertising will. We will become entirely dependent on advertising. And what happens when Google controls the majority of online ad revenue in this country? [...]
October 8th, 2007 at 11:21 am
Jeff,
Whenever things are growing this fast, it’s useful to consider possible limits to growth to keep from running over a cliff. Here’s some food for thought:
http://www.octavianworld.org/octavianworld/2007/05/google_a_contra.html
I’d be interested in reactions.
Cesar
October 9th, 2007 at 12:42 pm
Multiculti Multimedia Monopoly…
Jeff Jarvis explores “The real media consolidation: Google”: Bottom line: Google controls nearly 40 percent of online advertising. Now pair that news with the folding of TimesSelect. Consumers, as we used to be called, wonÂ’t support media and journa…
October 10th, 2007 at 9:26 am
[...] am Filed under: Advertising, Attention Economy, Long Tail, Media, Newspapers, Radio, Television Jeff Jarvis notes that Google controls 40% of online advertising, and that their share of online advertising is growing faster than online advertising as a whole. [...]
October 10th, 2007 at 5:31 pm
[...] Google’s stock price topped $600 per share for the first time and it appears that the company now controls more than 40% of online advertising. Not bad for a week’s work. Here’s a look back at when Google’s most important Internet [...]
October 14th, 2007 at 12:49 am
[...] be an even bigger public-policy problem than Microsoft ever was. Jeff Jarvis seems to agree and explains why: Consumers, as we used to be called, won’t support media and journalism with their money. [...]
October 15th, 2007 at 10:09 am
[...] Google controls 40% of online advertising. [...]