Andrew Chen

I think if the advertising was truly working in the first place, then "that" advertising will NOT go away. In a down economy, companies will laser focus on channels of revenue generation that are or have been delivering. I am not surprised to see Google's numbers as I have seen lots of B2B companies doing adwords because everyone else is doing. They know they are not getting good leads from them, but they still continue because they can afford to. As soon as the budgets are tightened, this expense is the first one to go. If a certain form of advertising was working well and delivering results - read: CPA/affiliates - that won't go way.

Yep, I wonder what the widget companies have in store for them. And do all of them have users who care about virtual goods?

'the value of advertising depends ultimately on its ability to influence consumer purchasing.'

I have to disagree. The value of advertising depends on its ability to connect the correct consumer to the correct product.

When you talk about influencing consumers, you're setting up a barrier to overcome that doesn't need to be there. Sales, which all advertising is supposed to enable, is based upon the assumption that people need help finding what they already are looking for. It's not a battle wherein we try to convince someone to purchase something they do not want. It's a joint venture to help someone find what they might miss without our help.

The trick is, finding out what they're already looking for.

I blame the classic fundamental error of online advertising: Failing to understand that the value of advertising depends ultimately on its ability to influence consumer purchasing.

When the economy goes in the toilet, advertising should follow. Just because there are more impressions to go around, doesn't mean there are more advertiser dollars chasing them. For advertising spend to rise, so does purchasing.