Ad spending to slow...time for Web 2.0 to get a new revenue model
(Credit:
eMarketer)
Internet advertising is set to slow according to research firm eMarketer. This isn't cause for panic, but it is cause for changing the revenue models for aspiring web startups. Consider:
The are some lower figures, for example the two expected white knights in new media advertising won't grow to levels many were hoping for, with advertising on social networking sites only expected to be 6% of the overall online ad spend in 2012, and rich media/ video rising to 13.1%; all in all it sounds like an Internet in 5 years time that isn't that much different to now, only with more money in the pot to go around.
This makes perfect sense if we remember that advertising, while making perfect sense for search (I'm looking for something, so sell me something related to my search), is a lousy way to monetize friendships (Facebook), business relationships (LinkedIn), goofy videos (YouTube), etc.
Online revenue models should be based on "abundance" (you need lots of activity spurred by no-cost services), and then charge for something related to that activity which doesn't slow the activity. Trust-based commerce for Facebook (eBay except between known or connected buyers and sellers)? Optimized video delivery and paid-professional video placement for YouTube? Etc.
It's time for creativity to resume in Silicon Valley. Aping Google is not the way to wealth and fame, unless you're distributing a Google-like search product (and even then it's a bit of a losing proposition, as Yahoo! and Microsoft can tell you). Aping Google's key insight - provide a paid service on the back of an abundance of free services - is.
Matt Asay brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. Matt is chief operating officer at Canonical, the company behind the Ubuntu Linux operating system. Prior to Canonical, Matt was general manager of the Americas division and vice president of business development at Alfresco, an open-source applications company. He is a member of the CNET Blog Network and is not an employee of CNET. Disclosure. You can follow Matt on Twitter @mjasay. 
