I think it also impacts a big chunk of their deal with Federated Media, the Silican Valley startup ad network of choice (so no more Snorg girls?!) It sounds like Federated will still handle sponsorships for Diggnation/Revision3 (which are technically separate) and supposedly will still play a small role at Digg. But since this is (I assume) their biggest client, I’d imagine they’re the biggest losers out of all this.

This could be the most high profile example yet of an emerging trend that I expect we’ll continuously see over the next year. All these booming social sites might generate a ton of traffic. But are any of them actually making any significant (relative to their overall market/mindshare) revenue?

MySpace is now technically bigger than Yahoo by some analytics standards. But does anyone think MySpace’s ad revenue is anywhere remotely close to Yahoo’s? Even with its big Google ad deal? I realize it’s apples and oranges, but the fact still remains. The audience is massive. How about the revenues? Marketers like ourselves will only be willing to throw money at something (no matter how attractive the demographic) for so long.

I don’t think we’re necessarily seeing another .com bubble forming - at least not across the whole net. There’s plenty of effective online marketing tactics out there and plenty of publishers generating revenue. But I think we might be seeing a bubble quickly growing among the Digg/Facebook/Twitter/Pownce’s of the world.

I think you’re right about the monetization of a lot of these Internet “darling” sites. We’re still waiting for Google to get a real monetary return on YouTube - and Google is the Internet advertising gem these days!

I think a lot of these sites are proving that, while there is some money to be made in online advertising, it’s hardly a viable business plan in terms of fully capitalizing on big traffic numbers alone.

To use your example, MySpace may bring in a lot of traffic and some decent advertising revenue. But it will never be able to match the profits of Yahoo! if advertising is the only form of monetization of the site. That’s assuming, of course, that Yahoo! doesn’t see a massive revenue drop (which isn’t out of the question in the coming years).

The real power of the Digg/Facebook/Twitter/Pownce’s of the world is reach and influence. So far… monetization hasn’t really occurred. I’m not suggesting it won’t happen. It just hasn’t do so yet.

[…] and Digg have both jumped off the Google advertising bandwagon. IAC dumped DoubleClick (which Google is the process of trying to […]