Advertising market on the Internet. Situation boosts?

What is the main headache of today’s advertising manager of any IT-company the business of which is built over the Internet and demands a constant advertisement? There is no necessity to think hard as the answer is quite clear – where to buy an advertisement site at the bottom price with the maximum traffic and envelope. And if the first issue concerning the placement is clear, the last aspects become more and more knotty every year. All these things happen due to market that has not formed completely and where market equilibrium fails to take place.

One more important factor is a kind of audience, the so called target to which the advertiser positions. If it concerns finances then the site with even a low traffic (less than 100 people a day) can be more expensive than the site with a higher traffic but which is devoted to, let’s say, fancy-work or needlework. Such dependence on target audience has lead to the situation when at the absence of equilibrium price between demand and supply the owners of financial resources are trying to get the maximum from the existing opportunities. One of the examples of such behavior on the market can be moneyblog.ru (the child of exchange service onlinechange), which is even being not a mature community with the traffic less than 100 people a day, offers its advertising areas at unnecessarily high prices. From the economic point of view this can be explained by a high level of traffic conversion which came to the site via advertisement. However, considering the fact that only a small percent of visitors is clicking on the advertising banners, it turns out that for example a big banner costing $600 will hardly pay for itself. Some critics raise an objection and say that sometimes with advertisement some image aims can be reached, as well as increase in recognizability of the brand. But this hypothesis is not valid as all the aims listed above are to be reached only under the condition of large audience. Such scheme can work at the same moneynews as the resource differs with a developed audience, which traffic is high enough, especially considering the fact that it is a highly tailored resource. Hence, we can conclude that the effectiveness and pricing of moneynews is justifies itself completely, and the new moneyblog is much overestimated.

Such situation can be viewed on all the sites worldwide. Even despite labor force it is too expensive to maintain a resource, and this means that the originators want to reimburse all the expenses by selling advertising places. It is interesting to note that the hiked prices for the advertisement are very often defined by incompetence of the owners in sites and elementary economics. Per se, the advertisement should cost 30% of the amount into which the traffic, preceding this advertisement, is converted. But even not very experienced in economy person can calculate that, for example, talkgold, offering advertising banner on the top place of the site for $8000, will hardly be able to guarantee the profit to the advertiser equal to $24000.

Also it is necessary to note that the resources, presented as forums, are ready to resort to various tricks to squeeze the advertisement on their sites. Especially it concerns the active use of posting technologies. We have already covered this topic in the last issue of TJ. When forum contains a great number of posts and there is a visibility of hot discussions and disputes between the participants. It is very easily to deceive the advertiser. The situation is aggravated also by numerous posters hired by various companies to promote their projects on the forums. Exactly such artificial traffic results in boosting on the market of the Internet advertisement. At this, it will be interesting to note that use of posters on the forum to increase prices for the advertisement is a very profitable tool to reach the set target. Just imagine, one Indian or Chinese poster costs only $50 per month. Taking into consideration the fact that only 3 posters will be enough for the forum, then $150 of investments will be refunded during the first month or even week.

One more technique to hike the advertising prices is the use of the so-called clickers. From the technological point of view the clickers who use different IP-addresses, click on the banners, and this later on is reflected on the statistics of advertisement customers. In case of clever use of this tool without abuse, it may happen that the advertiser who thinks that his project’s image is growing can forget and do not worry about the conversion of the traffic that comes with the advertisement.

The problem of advertising market on the Internet is also concluded in DDoS attacks that affect a great amount of resources. And here the advertiser is not protected at all from the loss of his funds. It is a question whether the owner of advertising sites will reimburse the losses of the advertiser or not, due to this fact DDoS attacks are actively participate in undermining of advertising market.

Undoubtedly all the owners of online resources are actively trying to level the price for advertising on the Internet to the prices of offline resources and argue that they have an equal traffic but they forget that purchasing power of offline consumer is higher that the online ones’, as not every user of the Internet possesses electronic currency for which he could buy something by having clicked on advertising banner, or speaking in other words, to convert into money. And as for real user, he on the contrary, can easily buy something having got interested in some advertisement.

All these factors are able to result in a situation when the market of advertisement which is developing as per chaotic algorithm on the Internet can crash and find its market equilibrium thus.

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