Will Government Inventory Flood the Local Ad Market?


Cash strapped state governments and agencies are beginning to experiment by showing ads to visitors to its websites in order to try to bring in revenue to offset budget deficits. While it is unclear if this concept will be successful enough to become widespread, it presents us with the potential for some new and interesting pairings of services with messages. For example, might we see ads for abstinence on websites associated with family planning? Could we see ads promoting smaller government all over the sites of state agencies? Could we see ads discouraging immigration on sites which are written in languages other than English?

But putting such situations aside, what will be interesting to see is if these experiments are successful, what will it do to the general advertising market which to a certain extent relies on a relationship between supply and demand in order to set its price. Imagine for example a billion new page views per month being available – how will this new inventory affect pricing for other consumer advertising mediums like radio, billboard and TV? Also, will Google benefit by being able to show ads in more potential places or will it take a hit because the larger inventory could reduce the amount of money advertisers need to bid on many keywords?

Moreover, local advertising is the new holy grail… Will new government local sites destroy the business model of a company like Patch.com which is already bleeding money looking for a successful business model selling ads in local markets?

Will this move force agencies to consider increasing their social IQ meaning your local Motor Vehicle Department will push consumers to a Facebook page and try to start a dialogue with drivers?

There are some intriguing possibilities here and because the amount of page views we are talking about is quite significant, it is worth considering some of the outcomes in advance as they have the potential to drastically change the advertising business.

Sheila Riley has more on the topic at the Investors.com.

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