Two years ago, at the onset of 2007, the scorching trend in digital media was supposed to be a stampede of brand advertisers to the Web. That onslaught was delayed somewhat by the failure of the Web’s biggest youth properties — sites like YouTube and MySpace — to entice major ad buys from consumer brands. But such brands have increased their Web investments, albeit more tentatively than agency execs had expected.
Now, amid a recession, the pendulum of spending growth may be swinging away from those newly arrived brand advertisers and back to the performance-based guys who dominated during the Web’s first 10 years. At least that’s the conclusion of JPMorgan, which argues in its latest “Nothing But Net” report and investment guide that many media categories will see more aggressive spending by direct marketers than by big brands.
Social media is one such category. JPMorgan analyst Imran Khan believes Facebook, MySpace, and other site owners must add more performance-based ad offerings, such as lead generation and PPC ads, to thrive in the downturn. “We do not expect broad adoption of advertising on social networking sites by large advertisers,” writes Khan. “And we think that, to the extent advertising takes hold on social networking sites, it will more frequently be in the form of performance-driven ads than display.”
In the area of ad networks, too, JPMorgan expects performance-based models to gain market share as improved demographic, geographic, and behavioral data become available and actionable. It believes the aggregation of inventory by Google, AOL, Yahoo, Microsoft, and others will support highly targeted ad buys geared toward conversion, and estimates the top 20 ad networks earned more than $7 billion in 2008, and will continue to grow much faster than the display advertising market as a whole.
In the video category, JP Morgan believes performance marketers have been alienated by the attempts of video platform owners to monetize through CPM-based sales. ComScore yesterday reported that U.S. Web users viewed 12.7 billion online videos in November, a 34 percent increase compared with 2007. Despite that reach, brand advertisers continue to be turned off by poor video quality and objectionable content, and Khan sees little chance they’ll change their tune this year.
Search, on the other hand, will continue to find favor, relatively speaking. JPMorgan projects 2009 will bring 10 percent year-over-year growth in U.S. search advertising. That’s down significantly from 2008’s estimated 28 percent growth rate, but higher than the company’s projection of 6.3 percent growth projection for display advertising.
“We now think 2009 will be a weak year for graphical advertising publishers, as we expect the graphical ad sector to under-perform performance-based advertising in a down economy,” the report concluded.
A lot of cool stuff is happening with email today. As an email marketer doing your job day in and day out, ... read more
Despite the fact that it faces growing competition from Facebook, Instagram and Snapchat, Google-owned YouTube is still one of the most popular ... read more