Is This The End of The Online Bubble

The online advertising market is saturated, and has no more room to grow. The traditional space for ads is overcrowded, and has started to shrink, as Internet users start to use ad blockers.

Ad placement companies have compensated by displaying ads on ever lower quality websites. Worse, they have led their clients into pay-per-display advertising instead of pay-per-click, much less efficient and difficult to track.
As a result, online advertising efficiency has been decreasing for years, and companies have to spend more ad dollars for the same result.
The process of ad placement has become ever more automated, obscure and complex, while intermediaries have multiplied, each taking a cut from the client's initial ad budget.

Controls and regulations are nonexistent, and a big chunk of ad spending is being stolen, plain and simple. Customers are growing aware of the phenomenon of ad fraud. Every new fraud scandal bears the risk of customers scaling back on online ad spending. The whole ecosystem is at risk of turning from growth to decline, overnight, in a rerun of what happened in 2000-2001.
When this happens, the smaller players will be wiped out. Alphabet/Google, who has 90% of its revenue coming from online advertising, will see its business scale back to the levels of 2010-2011, while its share price will crash to the $200-$250 area. Facebook on the other hand, has a better control of who is actually seeing its ads, and will benefit from the turmoil by gaining market share.

Analysis by Kalkis Research

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