What happens if Google adwords goes bust?
742,000 jobs were cut by US companies in March 2009, 200 of which were from Google’s advertising department.
Today we have informed Googlers that we plan to reduce the number of roles within our sales and marketing organizations by just under 200 globally.
Cuts to sales and marketing tells me one thing, that online advertising hasn’t escaped the financial meltdown.
With millions of publishers worldwide including most of the top media organisations relying on Google’s ad program entirely or at least partly for an income, I decided to put forth some ideas on just what might happen should the world’s largest online advertising firm suddenly disappear overnight.
Smaller companies filling the immediate void
Realistically the first thing that would happen would most likely be the emergence of thousands of ‘adwords alternatives’ blog posts and various smaller players in the targeted online market being inundated with publisher signups.
However, if the largest company in the field today was unable to sustain a business model then I see some key differences in business models compared to Google’s current ‘we’ll offer advertising to practically any site’ strategy:
Online advertising agencies would have to choose between high traffic or low traffic advertising. They’d either be able to cater to the large corporations and offer huge traffic sales to a relatively small clientele able to afford, or if they focused exclusively on low traffic publishers offer cheaper advertisements to more advertisers with cut throat profit margins.
Heavier reliance on alternative advertising models
Whilst it is true that currently contextualised online advertising is king, the fall of Google’s program would cast a shadow over similar less widespread programs. Currently the major publishers, both corporate and independent tend to rely on multiple sources of advertising models to deliver the most profit from their incoming traffic.
From affiliate programs to ‘pay-per-post’ to selling merchandise and more, there are certainly enough options out there to keep the industry alive.
I imagine online advertising models that involve goods and services such as affiliate programs, rather then selling targeted traffic such as Google’s model, stand a better chance at weathering the current situation. Governments worldwide are in the process of preparing economic stimulus packages and surely some of that revenue will be used on online purchases.
Private brokering of advertising deals between publishers and advertisers
The idea of private advertising between publishers and advertisers does happen today but is nowhere near the market share of agency style online advertising. Unfortunately the same obstacle that hinders it today will be the biggest hurdle to overcome in a post-adwords era.
With private deals either the publisher or the advertiser has to actively seek out the other. Unless you’re at the top of your field in a particular niche and a certain company within your niche is looking to advertise online, the chances of scoring an exclusive deal as a publisher are slim.
There’s a reason why private deals are usually only seen in extremely targeted high traffic and corporate media circles, obviously there are exceptions to the rule but they are far and few between.
Having said that private deals might take off in a post adwords era seeing as advertising online is still far cheaper then offline advertising and has a greater potential to reach a much wider audience.
Collapse of smaller ‘blogging for profit’ publishers
Whilst you will always have people who blog for pleasure currently even the smallest blogs are able to make a buck or two a month if they play their cards right.
I believe with the collapse of Google’s adwords online advertising might very easily return to the domain of being accessible to solely high traffic publishers in various niches, leaving the rest of us to either pay to put our own voices on the Internet or join up with free publishing services.
Currently I get by with an economy hosting plan due to only being a few months old (I’ve been blogging since 2002 on Blogspot but this is the first time I’ve taken it relatively seriously) but I know that as traffic grows without online advertising the hole in my hip pocket will get larger and larger each month. At least this blog is mostly text, heaven help the semi-popular photobloggers out there.
Arguably that could be seen as a positive for some but I think the information sphere as a whole would be at a loss overall with the abandonment of midrange traffic publishers, not to mention the loss of niche publishers where even the top range publishers are still mid to low range traffic wise.
Regardless of whether Google adwords goes under or not (and let me just say if it does, it’s extremely unlikely it will happen overnight), I do think it’s vital to have some sort of revenue backup plan.
Even if you’re hopeless at planning, as a publisher at the very least spend some time thinking about it, preferably before you’re in that uncomfortable position of potentially having to decide just how much publishing online is worth to you.
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