Wednesday, April 22, 2009

Advertising - Much needed by companies but sometimes frustrating for Customers

I was reading the Financial Times and came across one of a series of articles that reports on the dire state of the print media advertising market in the US as it has been heavily hit by the economic crises. The article ( the further drop in New York's Times aadvertising revenue (it fell 27% leading to a first quarter loss of $74.5m). This drop is not as accentuated in the digital media industry as it is in the print media.

Facebook is one of the companies which is seeking to increase or at least limit the damage of the economic crisis. With the deployment of the last makeover of its social networking site it is aiming to make advertising more targeted so that companies can benefit from better return of investment. However this apparently is leaving its toll on Facebook and other social networking sites who have followed the same trend. A study done by Interactive Advertising Bureau shows that such a strategy is turning off users of these sites (31% of social networking users are fed up with constant requests by brands). This could be a blow to these sites as they are trying to take the opportunity to consolidate their revenue base with the potential to expand further (especially with future economic recovery).

However the same survey highlights the fact that users would be happy to join groups if offered exclusive content or something relevant. This could be the an Ace for another company - Twitter - and could also explain it huge growth. Users can choose to follow mini blogs which they have an interest in and hence pick up the information the want. However Twitter still has to find a business model that will allow it to produce some form of revenue stream that could ensure its long-term survival. Hence the battle still remains for such companies as they need to satisfy their users while at the same time ensure their long term survival.

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