Om Malik posts a short synopsis at his blog today regarding PubMatic’s fourth quarter 2008 AdPrice Index Report.  Om says:

The desperate bid to rack up sales over the holiday season helped turn out a decent enough fourth quarter of 2008 for online advertising. Sure ads were down drastically from 2007, but it wasn’t quite as bad compared to the first three quarter of 2008, reports PubMatic, a Palo Alto, Calif.-based startup that sells ad-optimization products.

The trillion-dollar question is: Was this a bottom or was it a momentary lull in hostilities brought on by a widening credit crunch? Some analysts think that this might be a blip and that most large Internet companies — such as Amazon, Yahoo, EBAY — are going to see big declines in their revenue, though no such problems are being predicted for Google.

I looked over the free PubMatic report, and have come to a few conclusions myself over what some in the publishing industry see as quite worrying:

1. PubMatic looks at 5500 sites, out of millions that are ad sponsored.  If you’re a large scale site, it would not surprise me that advertising income is down.  Large sites have a harder time dealing with ad blindness than do smaller sites.  Also, large sites have more specifically-sponsored ads than do smaller sites that use contextual targeting.  If a site like About.com has advertisers buying ads at a higher rate than their contextual ads, what is the likelihood of someone visiting an advertisement for weight loss if they’re on a page dealing with raising bunny rabbits?  Slim.
2. PubMatic listed a markable fall in the Finance advertising submarket, but an increase in the Technology, Sports, Entertainment, Gaming, and Music submarkets.  With people losing money hand over fist in financials, the advertisers are probably cutting back on ads.  That’s a given.  With people desiring more entertainment in their lives, it makes sense that markets dealing with entertainment would see an increase.
3. PubMatic seems to not delve into the rapid growth of ad sponsored small scale sites, notably the bloggers and those with sites with very niche information.  These sites generally grab very little income individually, but based on the “long-tail” theories, they’re likely snagging SOME percentage of traffic and advertising income from the bigger sites.  This site, in particular, has some decent traffic from Google and Yahoo for search terms that would normally go to very large news sites.  I’m always surprised at how quickly the Global Unanimocracy Network gets listed in Google (sometimes within 15 minutes of a post, straight to Google’s first search page for a certain term).  That’s income we’re getting that isn’t going to CNN or Yahoo News or About.com.  My hope is to breach the top 50,000 site list again by February, but that still puts me 90% further down than the general types of sites that PubMatic is reaching.

I don’t think there is a fall in advertising revenue.  I speak regularly with other bloggers who are earning 5 figures a year from their sites (as does the Global Unanimocracy Network).  Their income is up.  Our income is up 50% year-over-year, even though I took a hiatus through 2007.  The key is to write not just quality articles, but to also target the search engines with proper optimization of your pages, titles, header, and other SEO processes.  Also, it is important to reduce ad blindness to one’s visitors by mixing up advertising placement and ad types (images, texts, varying sizes).  Advertising should not be blended so much that one tricks the reader to visiting, but prominent enough that applicable and interesting ads drive them to advertisers when they’re done with your site.

Another interesting effect of this so-called “decline” in advertising is that, over time, those who aren’t seeing a profit for their time spent developing a site will leave the market, opening up those same revenue streams to sites that wait out any possible slow down.

If you’re considering running a website with advertising sponsorship, or already do, I will be posting a series of short articles that will freely tell you how to maximize your income while increasing your traffic.  There are 5 simple steps that all online publishers should take — and many don’t.  I am shocked at how many HUGE sites ignore some basic principles of getting search engine traffic, the very traffic that accounts for 90% of the income to this site.

If you run a small scale website, feel free to comment below with your thoughts on your income over the past 6 months to a year.  I’d love to compare details.

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