Advertising slump could damage Web 2.0

A large part of the success of Web 2.0 can be attributed to the phenomenal growth of the online advertising market (along with cheap hardware and plentiful bandwidth.) So what happens when the advertising money dries up? According to a recent article in the Globe and Mail, traditional media is already experiencing a cyclical slowdown in advertising revenue. But because Google and other online advertisers can deliver reader views statistics to advertisers, they may be in a better position to ride through an economic downturn. David Dunne, a marketing professor at the University of Toronto, mentioned in the article that investment money might even move to the Internet in order to maximize return on investment. RBC analyst Drew McReynolds also noted that spending in the Canadian advertising market remains healthy. So online advertising, and by extension the web companies it supports, may not have reason to worry...yet.