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21st Century Portals April 4, 2007

Posted by David Card in Media.

I write a couple of important reports a year. This is one of them.

– Three companies account for 30 percent of time spent online, each with three times the market share of the next tier of competitors. And four companies control 55 percent of online ad dollars. But a combination of five catalysts could remake the industry.

– Social media and the re-birth (and re-invention) of online advertising are the most disruptive catalysts. Next-generation portals built around communications and entertainment offer promising opportunities.

– Google and MySpace are best-positioned to disrupt the current online media industry structure. Most other companies should not try to create general-purpose portals. While ad networks, syndication, and distribution make the middle of the Internet long tail viable, the concentration of power will remain, although with enough competition to prevent marketer price-gouging.

Yahoo is still the best-positioned company in online media to offer a combination of display advertising (including rich media, video, and behavioral targeting), sponsorships, and search, whether in integrated fashion or not, to both broad and targeted audiences. Yahoo’s got some issues, but they’re execution issues, not problems with vision or scope.

For reporters, here’s the press release. And here’s the payoff:

US Online Ad Spending, 2006

Google 25%
Yahoo 15%
AOL 8%
MSN 7%
Others 45%

Source: JupiterResearch Internet Advertising Model

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