Commerce and Advertising
Online advertising and commerce have an almost teenage sibling relationship. They are both growing very fast and people pepetually wonder which is better. From a profit standpoint, advertising is always going to be the golden child but topline growth is a different story.
Revenue growth, over the long term, will be one to one. When I say long term, I mean more than 10 years but less than, say 25 - when marketers might start valuing offline impact of online advertising (I am not trying to be cynical).
Commerce continued its stellar rise, even when the technology investing bubble burst in 2000. Advertising stagnated around for a few years.
Commerce companies like eBay, Amazon and IACI grew quickly. Yahoo didn’t and every other online publisher experienced similar stagnation. But in recent times, online publishers have grown like weeds. Much of this is catchup. At some point commerce and advertising becomes correlated and they grow in unison.
One data point is the great quarters eBay and Amazon just put in. Most investors had assumed wrongly their stage of maturity.
Online advertising may have another year or two of faster growth in it (simply because of the international aftershock - i.e. markets outside the US are 12-18 months behind it) but after that I would expect the two will grow largely in line.
The only difference is one has to pay a worker to pop a book in a box and into a postal van.
