With the announcement that advertising sales have slowed down for Yahoo!, there was a huge drop in the share prices for the company as well as several other large online companies. This is definitely a concern for anyone involved in the industry, and it is important that we all take notice. Several of the initiatives in this current Web 2.0 wave have models that are based around advertising dollars, and despite the inconsistency between the online advertising budgets and online purchasing/spending, the move away from more traditional advertising mediums is going to be slow.

For a company looking to save money, advertising is a tough area to pull from. If you use that portion of your budget effectively, it should be one of the areas that actually generates a return. Rather than being an actual cost, it becomes more of an investment. With online advertising, the investment, from the perspective ofÂ? old-fashioned, conservative companies that have multi-million dollar advertising budgets, is far more volatile.

Do I think that this is the start of a bubble? Well, yes and no. The movement of advertising budgets to this newer and sexier platform will continue to be a slow process. It’s somewhat of a if it aint broke, don’t fix it attitude, and many of these companies may not be setup to fully appreciate the benefits of advertising online. Companies need to embrace online advertising, but they cannot use the same approach that is used in traditional forms of media. With many of the up and coming Web 2.0 companies (anyone else cursing O’Reilly for that term yet?) depending on these advertising dollars, we will see them start to drop off. This could be considered a bubble bursting, but I like to look at it as more of a survival of the fittest situation. Those companies best able to adapt to the situation, where advertising revenue isn’t significant enough to sustain their business, will evolve their business models to maintain themselves.Â? These businesses will thrive, whileÂ? those companies unable to adapt, will simply become extinct.

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