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Web Companies Scrambling for Holy Grail of Ads

Internet companies are chasing new ad strategies, even as their economic effectiveness is called into question.

It's like we hit the Silicon Valley's Run for the Roses, only instead of horses, there is a line of social networking and media companies, and instead of a blanket of roses (and a whole lot of money), the prize is advertising sales (and even more money, in theory). Such companies as Facebook and Twitter are heavily on the hunt.

That's got to mean it's a sound revenue stream, right? Because the wunderkind are out in front. Maybe not. Although there's a lot going on, there are also massive red flags that suggest using advertising as your main business model may not be the road to long-term sustainability.

First, just some of the ad mania we're seeing:

What all these companies and approaches have in common is desperation. Facebook is desperate to grow quickly enough to justify its stock price and investor expectations. Twitter needs enough growth to justify all the investment it's received. Details, Mental Floss, and Mashable are, well, just desperate. Any time you start breaking up the furniture to burn and keep warm, things aren't looking cheery.

What breeds desperation? Fear. And that comes from the powerful forces like the following:

In other words, the future of ads on the Internet is shaky. Although users seem disinclined to pay for pretty much anything online, ads have been a fallback. But they may no longer be, and it's time to investigate alternatives (such as they are).

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Last updated: Sep 12, 2013

ERIK SHERMAN | Columnist

Erik Sherman's work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, and Fortune. He also blogs for CBS MoneyWatch.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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