There may be too many online businesses competing for too little advertising revenue, a senior marketing executive has warned.
Speaking at the Monaco Media Forum this weekend, Maurice Levy, chairman and chief executive of marketing giant Publicis, said that the online advertising market may not be large enough to sustain all of those who are gunning for a piece of it.
He said: “Everyone is seeing advertising as the manna. Far too many people are building plans based on advertising and they may well be disappointed because there is not enough money for everyone.”
Levy said that many new media companies are relying primarily or solely on online advertising for revenue, in the hope of achieving a global reach to attract online marketers.
Last month social networking phenomenon Facebook, with 46 million users worldwide, sold a 1.6% stake to Microsoft for a staggering $240m, valuing the business at $14.8bn.
However, Levy warned that there is not enough ad revenue to go round, which could lead to valuations plummeting as online advertising becomes a harder sell.
He added that the Web 2.0 bubble could burst in a similar scenario to the original dot-com crash in the late 1990s.
Levy said: “It’s exactly the same situation as we saw at the end of the 1990s, when everyone thought that because he had a website he’d get the valuation. Now everyone building a Web 2.0 operation believes he will receive the advertising.”
© Crimson Business Ltd. 2007