Supply and Demand Advertising Industry

1959 Words Mar 16th, 2014 8 Pages
Supply & Demand

In recent years, internet advertising has taken the advertising industry by storm, as it continues to experience huge, incremental growth. Companies are moving away from the dark-ages of print ads and radio spots and entering the digital age of online advertising. In the United States, internet advertising revenues soared to $10.7 billion in the third quarter of 2013, representing a 15% increase over the $9.3 billion in the third quarter of 2012(IAB, 2013). The graph below was retrieved from the Interactive Advertising Bureau website and depicts quarterly internet ad revenue since 1996. The graph portrays the remarkable gains seen by the online advertising industry over the years. As consumers are spending more time on
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CPM prices can vary greatly depending on the popularity of the website.(Online Advertising Pricing Models, 2000). In a “cost per click” model (CPC), the advertiser pays for only the number of people who click on the ad. Google AdWords, for example, allows advertisers to bid for keywords against one another in fast online auctions. Some advertisers are willing to bid as much as $50 for a single click on a popular keyword, such as “mesothelioma” (Gleick, 2011).

Demand As consumers spend more of their time online, the demand for internet advertising continues to rise. Traditional advertising methods such as television, radio, newspapers, magazines, billboards, and directories are being abandoned by companies who desire to shift their marketing strategies to the web. Advertisers are taking advantage of the benefits of online advertising, including its low cost and ability to reach a large number of consumers. The internet makes it possible and cost-effective to operate markets with millions of participants and millions of products. Every day, eBay has two hundred million product listings, Google runs three billion searches, and two hundred million users log into Facebook (Levin, 2010). The internet’s vast reach can allow advertisers to reach significantly more people than traditional advertising at a fraction of the cost. In addition, online advertising is seeing increased demand from advertisers due to its efficient ability to target
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