Online Ad Model: Let the Past be your Guide

Last Updated Aug 26, 2008 2:38 AM EDT

One of the few constants over the past decade in the digital media industry is that online advertising in the U.S. just keeps growing quarter after quarter. From the time numbers started being tracked in earnest, in Q-1 1997, online advertising grew for 14 straight quarters before stalling, and then falling for about two years as the Web 1.0 bubble burst.

Once, the upturn returned, in Q-4 2002, we saw 20 continuous quarters of strong growth until the first quarter this year, when overall online advertising revenue fell about 2 percent. (Even then, Q-1 2008 was up more than 10 percent over Q-3 2007.)

Furthermore, Bernstein Research projects this year's overall growth at 20 percent, despite significant spending cuts by automobile advertisers and others in a softening domestic economy.

Indeed, there is plenty of evidence, which we've cited here before, that there is still significant room for newspaper sites in particular to improve their ad revenue performance. What's happening to online media is reminiscent historically of print and broadcast advertising revenue trends, which were relentlessly positive until new media platforms finally starting diverting advertisers, causing retrenchments.

I can't predict the future, but if I were to make an educated guess, it would be that online ads will provide a solid basis for building media companies into the coming decade. Numbers usually don't lie, and these figures are most impressive when looked at over time.

Remove the dot. bomb blip, and we have seen 35 of 37 quarters with strong growth. That's almost 95 percent! Think about it.

  • David Weir

    David Weir is a veteran journalist who has worked at Rolling Stone, California, Mother Jones, Business 2.0, SunDance, the Stanford Social Innovation Review, MyWire, 7x7, and the Center for Investigative Reporting, which he cofounded in 1977. He’s also been a content executive at KQED, Wired Digital, Salon.com, and Excite@Home. David has published hundreds of articles and three books,including "Raising Hell: How the Center for Investigative Reporting Gets Its Story," and has been teaching journalism for more than 20 years at U.C. Berkeley, San Francisco State University, and Stanford.