Thursday, July 05, 2012
Online Advertising And Profits
It's people like you (okay, like all of us), not paying attention to the online ads, who have caused Microsoft to take a hit on their investment in online advertising.
I'm sure that when aQuantive was invented, there was all kinds of hype about the vast sums of money to be made in product promotion on the Internet.
Huge audience, easy access to market share, get your stuff out there in front of countless eyeballs....but no one ever thought to consider human behavior when it comes to advertising.
No one will watch an ad if they can avoid it, and with a computer, it's easy to avoid.
Microsoft got burned so badly on their acquisition of aQuantive that the write-down on the loss will wipe out the corporation's profits for the year. That means that Microsoft spent big to get the best of Google, and it lost big. Lost it all. aQuantive ended up having no value.
What would anyone expect, considering how poorly Facebook has done?
The money-making potential of Facebook rested in its advertising revenue, but it hasn't taken long for vendors to realize that their ads are ignored there and they're throwing away money in marketing campaigns without an audience.
Google sells ads and makes money, but if you're looking for something and the vendor selling that something pops up, you'll click on it. You are a more active participant when you use a search engine. The rest of the time, it's too much like television commercials.
Sadly, even the Bing search engine isn't generating the revenue that Microsoft had hoped for. It can't beat out Google, hasn't gotten any traction, and may be a drag on Microsoft's bottom line as well.
Oh, and Microsoft's writedown? $6.2 billion. So they're still making money at what they do best. It's the expansion element that's a struggle. But then again, that's the free market at work.