For Online Advertising, Media Consolidation Is a Good Thing

Understanding Four Key Groups in the Universe of Websites That Marketers Should Know

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David Hallerman
David Hallerman
Much has been written about the "long-tail" concept since Wired's Chris Anderson popularized the idea in 2004. But for all the discussion about how effective long-tail strategies are for search-engine optimization, viral marketing, web retailing and social-media marketing, it seems that many online advertisers -- especially display advertisers -- are missing the boat.

Media continues to consolidate, and increasingly the vast majority of online ad dollars go to just a handful of web publishers. By ignoring the rest of the web publishing world, online advertisers are avoiding a perfect opportunity to reach much larger audiences at a reduced cost.

From an advertiser's perspective, the universe of websites can be divided into four groups.

The Short Tail: The top 10 online ad-selling companies, which received 71% of 2009's total internet ad revenues, according to the Interactive Advertising Bureau. These include Google, Facebook, Yahoo, Microsoft and AOL.

The Mid-Tail: Ad-selling companies 11 through 50, which received a sedate 18% of last year's internet ad revenues.

The Long Tail: Ad-selling companies numbers 51 to 250, which received about 8% of last year's internet ad revenues, according to eMarketer.

The Very Long Tail: Every other online ad-selling site -- thousands of sites, number 251 and up -- which received a mere 3% of all internet ad spending in 2009.

A closer look at those revenue figures shows how many major websites represent a small slice of the market. More than 82% of revenues from the total U.S. online advertising market go to just 25 web publishers. That means the 26th-through-50th-largest ad-selling web publishers -- not small sites in terms of traffic -- got a mere 7% of the total U.S. online ad spending in 2009.

While many marketers will want to put a sizable share of their ad budgets on the largest sites -- the Googles, Facebooks and Yahoos of the world -- finding the blend of less-huge but often still-prominent sites, which help reach their target audience, is equally important. And such a strategy might often be much more cost-effective.

The consolidation of the U.S. internet ad market is more extreme than the top 10 figures above indicate. In Q1 2010, marketers spent nearly 60% of the total U.S. internet ad dollars on just four web companies alone: Google, Yahoo, Microsoft and AOL.

While a large part of that acute spending consolidation comes from Google's 38.3% share -- mainly paid search ads -- it also indicates that many advertisers could spread their ad budgets across even just the rest of the short tail and the mid-tail and get more bang for their buck.

David Hallerman is a senior analyst at eMarketer.
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