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Apr 9, 2008

NEWS: Mixed Outlook for Advertising, Silicon Valley

Web Advertising Spending Has Weakened--RBC

agonyofdefeat.jpgRBC analyst Ross Sandler hosted an investor dinner last night featuring a dozen ad executives. Ross's summary suggests that the current consensus--overall advertising spending is weakening but online remains strong--is wrong.

Key points:
Ad agencies are seeing pockets of weakness across some specific advertiser categories (finance and domestic auto), but the weakness is isolated and not broad-based[so far]

SearchGoogle's recent algorithm changes may actually improve revenue growth, but the current environment is showing some signs of demand-related softness.

Display: Some ad networks are seeing flat y/y growth in the US [awful], while international territories are much stronger. Domestic growth is incrementally worse than expected and international incrementally better.

TVCautious optimism remains for strong upfront buying in network TV.

PrintThe environment remains very challenging.

Ad Networks/Ad Exchanges: Advertisers/publishers are starting to question the value of ad networks as they weigh the benefits of brand value versus sheer reach. [About time. Glam Media investors, are you listening? Still comfortable with that $500 million valuation?] Ad exchanges should facilitate more transparency and efficiency in the buying and selling of display ads, and potentially disrupt the legacy blind ad-network business model.

Social Media Monetization: The monetization of social media is difficult (a structural issue), and will remain challenging in the near future. 

Economy Has Become a Drag on Silicon Valley

SAN FRANCISCO — Housing prices in Silicon Valley remain defiantly high. New BMWs and Saabs cruise Highway 101. But for the first time there are signs that the current economic downturn is taking its toll on the country’s cradle of technology and innovation.

The New York Times

Job growth has slowed, start-up companies are hiring and spending more cautiously, and early-stage investors who nurture the start-ups with money and expertise are growing more frugal.

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