2008 Online Advertising Predictions

February 10th, 2008

Even though anyone who actively reads blogs is sick of them by now, I must admit I’m a sucker for yearly reviews and prediction articles and blog posts. Even though most of the time I realize the writer is just guessing, it’s interesting to get the perspectives of others on where they see the world going. In past years I’ve made posts with predictions on Web 2.0 companies, and have also weighed in with web analytics predictions. Since the advertising market has really been my intense focus this year, I figured it was long past time to make my own 2008 Online Advertising Predictions.

When I began writing this post, it was before the Microsoft bid for my employer Yahoo!, which I can’t comment on. The only thing I will say is that no matter what happens there, it’s bound to have profound effects on the advertising landscape in 2008 in ways that are hard to predict.

These predictions may not be as negative as Greg Linden’s, or as cheery as John Battelle’s, but here goes.

1. Publisher CPM rates will stagnate or decline in 2008.
As I recently posted I think, CPM rates for publishers will stay stagnate or decline in 2008 even though we should see technology improvements that would make us think CPMs will rise.

The reason for this is that I think supply will continue to grow at a faster pace than demand shifts from TV and other budgets. Technology improvements can help CPMs rise, but I just don’t know if we’ll see growth this year, especially if an ad slowdown happens due to a recession.

2. Large advertising acquisitions will be few and far between.

This one already is looking wrong based on what’s going on with Microsoft and Yahoo!, but I do think that we won’t see as many purchases in the 250M+ range this year in the advertising space. Most of the big players have large acquisitions from 2007 they are digesting and integrating, and I’m not sure how many attractive larger companies there are left to acquire.

3. Smaller acquisitions will still occur.

Acquisitions won’t totally die though, we’ll still see some smaller technology and media purchases in 2008. There are some promising smaller technology companies as well as a few media properties that could be attractive acquisition targets for the giants.

4. It will be a year that seems to lack progress as the big players digest acquisitions and build behind the scenes.

There is a ton of technology work that’s going to be going on at Yahoo!, Google, Microsoft, AOL, News Corp., and others in this space. Most of these companies bought technology in 2007 that they need to integrate and improve upon in 2008 before advertisers and publishers really fully reap the benefit. So it may seem like there isn’t much that’s truly new in the space, but everyone is working like mad behind the scenes building out ad platforms.

5. There will be a privacy flare up involving online advertising.

There have been some minors ones in the past, but I feel like this year we’ll get our first big privacy blow up about something relating to online advertising. Behavioral targeting that goes too far? Tying ad data to customer ids? Not sure what it will be, or who will do it, but there will probably be a bigger deal made out of it than it deserves when it occurs.

6. People will begin to question very hard how Facebook and other social networks can monetize their audiences.

I actually wrote this before Google’s earnings call where they blamed their deal with Myspace for some poor results. But that’s exactly what I expected and what we’ll see with other social networks as well. The advertising nut on social networks has not yet been cracked, although some interesting stuff is being solved. And even at the low CPM rates they’re churning out, these social networks are still making significant money. But enough to value Facebook at 15B?

7. Video advertising will continue to suffer from lack of standards.

The IAB and others are making strides in trying to set video advertising standards, but 2008 will still see suffering. There are numerous video ad networks and video technology providers who all handle advertising differently. The lack of standards makes it harder for advertisers and agencies to distribute their buys across lots of publishers and networks, and makes it harder for publishers to get as much demand as they could otherwise.

8. Mobile advertising will start it’s upward trajectory, but it’s still a year or two away in the USA.

After now spending a large chunk of my web browsing time on my iPhone, I really believe mobile online advertising has a big future. I’m not sure what the format or best technology for it will be, but the web usage on mobile phones is going to skyrocket in the USA over the next few years as iPhones and other smart phones become as ubiquitous as computers and iPods. While on an iPhone you can still see standard ads while you browse sites, they aren’t the most effective way to hit the mobile audience. You’re usually not seeing the whole page at once, so you’re focused in on the text and the ads are basically not even on the phone screen. Also, the local tie-in with mobile advertising will eventually be huge. Give me ads for the restaurants I’m near, movies playing near me, stores I’m located by, etc.

9. Publisher advertising tools will get better.

There’s a lot of work being done to try and make publishers lives easier, and everyone is still not there yet. Even with all the focus of the past few years, it’s still TOO HARD for publishers to manage their advertising in one place and maximize their yield. 2008 will help by the end of the year.

10. Advertiser tools won’t, which is strange.

For some reason we’ve seen more technology enhancements recently in the publisher space, while the advertiser space has been for the most part ignored. Not totally, there are a few companies I know of doing cool things, but generally it’s still too hard to buy display advertising on the web. Search is easier, but also not perfect. Tools that help streamline the buying process and enabling my dad to do display ads for his Swopper chair business as easily as he can do search text ads would be a great start.

That’s it for now, we’ll see how many of these come true in 2008.

Related Posts:

• It’s Been a Wild Few Days, and Looks to Be a Wild Year
• Is There Enough Advertising Dollars For the Startups?
• Online Advertising Taking Over TV Advertising: It’s Happening
• JP Morgan Predicts Display Advertising CPMs Will Rise, But Will They?
• Good Examples of Ad Operations Disasters

Entry Filed under: Advertising