(2008-10-14) Borthwick Ad Market

John Borthwick had some interesting thoughts specifically about Advertising in his recent portfolio memo.

• The shift to online has been stemmed first by the Olympics and second by the election. But year-over-year growth in ad spend has been down across the board (see slide 32 of the sequoia deck, linked below). Expect the next year to be ugly and different. I think spend will move online, very fast, and print may right downhill. And people will look for ROI - real measurable results. Monetizing Social Media is hard. Much to do here, much money/share to make/take.

• The scale focus on auction-based ad buying (AdWords) has distracted us from other business models. This week I had a bite with the CEO of Hi Media (who bought FotoLog): They are an Ad Network, but they are now making a lot of money on payments. And a significant chunk is via "MicroFame" payments - Fotolog users voting each other up in popularity based boards. In September, some users spent more than $2k each voting on these boards. Many of our companies are experimenting with payment models - Tipjoy, Ideeli, IILWY, Covestor, SomeEcards ... there is money to be made here - from payments to item sales to t shirts.