I've got news for you Mr. Falco.
"AOL’s recent lower-than-expected growth in advertising revenues was a “hiccup” and did not indicate any “radical disruption” to its business, said Randy Falco, the US television executive who took the top job at the internet division of Time Warner this year."
Some recent data released from Bear Stearns shows Mr. Falco may be "off-base" - as it relates to what he calls a "hiccup" -- I call it a PARADIGM SHIFT in places where consumers are spending their time, consuming internet media.
"The largest user group in social networking/user generated content sites, are Adults in the 35-54 yr old category -- they are spending nearly 40% of their time online in Social Media properties (like Myspace, Facebook, and Linked In) -- this is directly at the expense of portals like AOL and Yahoo. "
My Space had year over year growth of 35% from 06' to 07'.
Facebook had year over year growth of 103% from 06' to 07'.
What do you think is the AOL portal properties year over year growth?
I'm sure for some properties like AOL IM, it is off the charts.......but, for their main, content driven portal -- it is significantly less.
What does this mean?
It means that advertisers that once flocked to portals are beginning to diversify their media allocation -- and INCLUDING SOCIAL MEDIA AT A FAR FASTER RATE THAN EXPECTED.....and, this is at the expense of portals.
Page Views for Web 2.0 sites are growing at such a rate (oversupply of inventory) that it makes the advertising FAR MORE COST EFFECTIVE, to reach a similar audience for a brand marketer.....(than portals).
Engagement/Usage for Social Media is FAR HIGHER than portals.
In 2011, it is estimated than the US revenues for Advertising on UGC (user generated content) will exceed $4 billion dollars......
"Conclusions".....
1) Social Networking is growing and here to stay.
2) Social Networks could become the new portals.
3) Social Networks can be monetized, and there is a large opportunity to do so.
"Hiccup", is not how I would describe the shift going on with portals.
It's more like a "evolutionary change" eerily similar to Mr. Falco's past, in watching TV advertising budgets begin to move onto the internet......
Full disclosure: I'm a shareholder and fan of AOL, but I'm concerned when a leader describes media consumption shifts, as a "hiccup" rather than what it really is.
"Seldom turns out the way it does in a song.
Once in a while you get shown the light
In the strangest of places if you look at it right" (Hunter/Garcia, Scarlet Begonias)
Time to look at the data......
It aint no "Hiccup."
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