The Online Advertising Market
Let's begin our analysis with the main area in which Google competes: online advertising. As of this writing, the prognosticators in the economic press—The Financial Times, The Economist, and The Wall Street Journal, among others—have announced that the Internet advertising market is nearly mature. Their critiques, based on surveys by marketing professionals, forecast the end of two-digit growth. The response rates of advertising have, they say, become seasonal. As evidence, they cite a peak in the cost of clicks at the end of the year—for example, from US$26 in August 2005 to US$56 in December 2005. This seasonal shift comes as no surprise because sales typically rise during the fourth quarter of the year when people ...
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