http://www.dmconfidential.com/blogs/column/Digital_Thoughts/1352/
Those doing lead generation occupy an enviable space. It's a business that has faired well during the ad recovery, and despite some hiccups that arose as a New Century imploded, more verticals than not have an optimistic outlook. Unlike the ad network technology space, instead of a flurry of acquisition activity, deals have occurred steadily, the most recent being a majority investment into Nextag that valued the comparison shopping and lead generation firm north of one billion dollars. Many of the people that I've met in the lead generation space didn't enter lead generation with a grand vision. They saw it as a chance to make money, and usually they had some prior Internet advertising experience as well as some vertical expertise. Much of that prior work experience came at another cash flow focused startup, not at a venture backed firm. Even as they grow now, they don't necessarily think about having outside investors.
If you find your business in a state of growth where having access to more money could help you grow faster, such as pay for more affiliate traffic, then you might consider taking in funding. If you have a technology or process that has played a crucial role in your growth and find that you could do so much more if you could hire more engineers or perhaps sales people to bring in the clients, here too you might want an outside investor. Obviously, having outside investors is not for everyone. They will hold you accountable and push you for results. They will challenge you and have no problems replacing you. For these same reasons they can also become a huge catalyst to growth and guide you towards an exit bigger than you would have thought. And, even if you ultimately decide not to accept funding, the process can add a lot of value. This week, we thought we'd share with you our thoughts on what to expect if you start to engage outside investors from outside the industry and tips for when you do meet.
What to Expect:
· Think High School - Investors come in all types. The ones who came from our industry or work in our industry still, you probably won't think of them as investors. For lack of a better description, they feel like one of us. Others won't, and those we describe here. While a slight over-generalization, some of the ones we have met give off the same vibe as Hollywood A-Listers or the in-crowd at high school. They have their circle, and they look very critically upon those outside the circle. You are there because you might need something of them. Almost all of them have made their money, so they can afford to view you, not with disdain, but indifference. Dealing with them comes with a lot of rejection and comments that an outsider not having to live the day to day can afford to make. It's a different story when you've created the next Facebook. Then, you're like the college quarterback coming back on winter break. The cheerleaders will want your attention and the other jocks will too. If they don't, then you can chalk it up to jealousy, and you won't care anyway. Dealing with some investors is a "what can you do for me" environment.
· Superman or Vampire - An investor can do a lot of things for you, and most have dual developed dual personalities. On the one hand, they have knowledge and resources you don't. They have the ability to open doors, get favorable terms, and increase the value of your brand in ways that a lone entity simply can't. They also have the same power in reverse. They can suck you dry. Take away your spirit, put pressures on you to change your business, even play a role in removing you from your own business. Ultimately, it's a little of both. They are there to add value and take value from you. The trick is making sure it's in that order.
· "Next" - Meeting with investors feels like a different version of MTV's dating show, Next. You will have your time with them. If you make it through the full date, you get funding. But, they can and will lose interest and sometimes for reasons that won't make sense to you or the viewing audience. Like Next, they have other options waiting, but they are also wondering whether the ones that follow you aren't as good. Luckily, they can choose more than one date, but it's a helpful analogy as you remember that they are always in search of the next thing.
Tips:
· Be Confident - Investors invest. They need you to execute. You have created something that got their attention in the first place. They might have a better grasp of how to build a billion dollar business and can lead mind numbingly complex conversations about solving the business ecosystem, but they don't know your business. Ultimately, they have money they need to place, and as often as not, they judge the business by the person. If they can believe in you, that's a huge factor in their decision. When you talk, if you don't agree with their assumptions, don't roll over. Challenge. Push back. Do it based on reason and experience and not simply because they have some doubt.
· Think Like Them - Management books always talk about being able to think like your boss for being a better employee. Understand their objectives and how you can accomplish them. The same holds true for investors. They want growth, and they want an exit. They want longevity even if they will flip your company. They need something that will sell well to others. An over-priced conference series like Elite Retreat is interesting, but an investor won't want to sink money in it or buy it out. It can grow to a multi-million dollar business and make a handful of people quite wealthy, but in its current format it has a ceiling. It's not like Right Media, where if you apply it to Yahoo, you don't see 1+1 = 2 but 1+1 = 3. Now, if Elite Retreat didn't accept money but took a stake in the companies, then it might be more interesting, or if it tried to see more companies than fewer with the aim of putting pieces together to form a larger company, then it has the type of growth and potential outside investors want to see.
· Listen Selectively - Much of what they say will sound like criticism, and you could easily take it personally. Think of it like a movie or reality show. The dialogue used in movies would break up most relationships if used in real life. But it has dramatic flare. Investors often operate in a bubble and talk about you and your business as though you aren't there. Like a movie, listen for the main points, the insight you can use, but don't let the negative get your down. They often don't know they are doing it. You and your business are just business. There is nothing personal in this. In the end, pretend it's not really you that is being discussed, much like a movie is not about you but for you.
Now fully armed, if you would like an introduction or more information, email us.
Showing posts with label advertising forcast. Show all posts
Showing posts with label advertising forcast. Show all posts
Thursday, June 7, 2007
Tuesday, April 17, 2007
72 percent rise in digital revenue for U.K.'s online publishers
72 percent rise in digital revenue for U.K.'s online publishers
A recent survey has found that the U.K.’s digital publishers can expect 72 percent growth in 2007, double what they were forecasting this time last year.
by Helen Leggatt
The survey was carried out by the U.K.’s Association of Online Publishers (AOP). The AOP represents around 160 of the U.K.'s largest online content producers, including the digital divisions of newspapers, magazines and broadcasters, such as the Guardian Media Group.
According to the data, collected from the 57 participating companies, U.K. digital publishers saw an average increase of 60 percent in turnover in 2006. The total turnover for the U.K. AOP's members rose to $1.1.billion from $682 million the previous year. This year publishers are forecast to see growth of around 72 percent.
"This is a remarkable set of figures. 2006 was a year of spectacular digital growth, innovation and investment by the UK's media industry - and our forecasts show there is no sign of this letting up,” said Simon Waldman, chairman of the AOP and group director of digital strategy, Guardian Media Group.
On average, 12 percent of AOP members’ overall revenue now comes from digital channels.
Three-quarters of online revenues came from advertising, with display contributing 59 percent, classified 16 percent and paid-for content (including syndication) 12 percent.
Online revenues from paid-content has increased 50 percent, with nearly half (46 percent) of AOP members charging for content, up from 37 percent in 2006.
Tags: Association of Online Publishers, digital publishers, online revenue
A recent survey has found that the U.K.’s digital publishers can expect 72 percent growth in 2007, double what they were forecasting this time last year.
by Helen Leggatt
The survey was carried out by the U.K.’s Association of Online Publishers (AOP). The AOP represents around 160 of the U.K.'s largest online content producers, including the digital divisions of newspapers, magazines and broadcasters, such as the Guardian Media Group.
According to the data, collected from the 57 participating companies, U.K. digital publishers saw an average increase of 60 percent in turnover in 2006. The total turnover for the U.K. AOP's members rose to $1.1.billion from $682 million the previous year. This year publishers are forecast to see growth of around 72 percent.
"This is a remarkable set of figures. 2006 was a year of spectacular digital growth, innovation and investment by the UK's media industry - and our forecasts show there is no sign of this letting up,” said Simon Waldman, chairman of the AOP and group director of digital strategy, Guardian Media Group.
On average, 12 percent of AOP members’ overall revenue now comes from digital channels.
Three-quarters of online revenues came from advertising, with display contributing 59 percent, classified 16 percent and paid-for content (including syndication) 12 percent.
Online revenues from paid-content has increased 50 percent, with nearly half (46 percent) of AOP members charging for content, up from 37 percent in 2006.
Tags: Association of Online Publishers, digital publishers, online revenue
Tuesday, April 10, 2007
Media Buyers: Marketers to Use Ad Networks More
Media Buyers: Marketers to Use Ad Networks More
Some 66 percent of advertisers plan to increase their use of online ad networks this year, according to a new survey of digital media buyers and planners by ad network Collective Media, which also found that 88 percent of the respondents plan to use an ad network - up from 77 percent in 2006, writes MediaPost.
However, the majority said they were frustrated over the number of ad networks and the complexity of the marketplace. Some 62 percent of the media buyers polled said there are too many ad networks, though only 17 percent said all ad networks are pretty much alike.
The survey found that the majority - 80 percent - are using ad networks for direct marketing, while only 6 percent are using them for branding. However, 40 percent are using ad networks for both purposes.
Some 59 percent of agencies/advertisers limit their use of ad networks due to a perceived lack of editorial control, including concerns over the types of ads being used and their position, according to those polled. Moreover, 38 percent of respondents cited audience duplication because of publisher overlap as a major impediment.
Some 66 percent of advertisers plan to increase their use of online ad networks this year, according to a new survey of digital media buyers and planners by ad network Collective Media, which also found that 88 percent of the respondents plan to use an ad network - up from 77 percent in 2006, writes MediaPost.
However, the majority said they were frustrated over the number of ad networks and the complexity of the marketplace. Some 62 percent of the media buyers polled said there are too many ad networks, though only 17 percent said all ad networks are pretty much alike.
The survey found that the majority - 80 percent - are using ad networks for direct marketing, while only 6 percent are using them for branding. However, 40 percent are using ad networks for both purposes.
Some 59 percent of agencies/advertisers limit their use of ad networks due to a perceived lack of editorial control, including concerns over the types of ads being used and their position, according to those polled. Moreover, 38 percent of respondents cited audience duplication because of publisher overlap as a major impediment.
Thursday, March 22, 2007
Why most of the CPA/Brokerage industry will not be around in 5 years.
from Digital Moses March 22, 2007
by Adrian Bye
Many people currently involved in the CPA industry feel that this industry is rock solid and not likely to change anytime soon. They may be in for a shock. There are developments coming from technological, business and legal areas which are going to have huge ramifications on the industry. One of those just happened.
Specifically I am referring the brokerage fees that CPA networks and brokers charge (around 20%) to push offers to fill the internet demand for remnant inventory, and the inefficiencies and expenses that are put in place by having so many humans involved in making web advertising work. Over time these people will be replaced by technology, just as many industries have been overturned in the past by modernization causing blue collar workers to lose their jobs.
The three biggest sources of traffic for a typical network are:
a. Email marketing
b. Pay per click traffic
c. Web inventory such as banners and text links
We’ll talk about these one by one.
CPA search marketing
Pay per click marketing is changing. Google has just announced it is going to offer a CPA model. At the moment it is possible to make a decent living by being good at PPC arbitrage of CPA offers. This works right now because Google and Yahoo have focused their business model around selling clicks, rather than selling actions. They do this because this is their version of branded CPM advertising – they can generally get more for it.
However, this causes huge inefficiencies in the system, because it is time consuming and complicated to figure out how to drive lots of PPC traffic, enabling therefore arbitrage opportunities.
Since Google has now started offering a CPA system, and Yahoo certainly will, this will change dramatically. Advertisers will be able to add a bunch of creatives into the system, along with a list of keywords and a CPA they are willing to pay. The system will then automatically test the base keywords you inserted, along with an extra list of keywords google generated itself. It will test them all against the various creatives you made; keeping pricing under a certain CPA you have set. The entire system will be fully automated, and the current arbitrage which is possible today will go away. Google and Yahoo can make quite a lot of money by making this change, given the average network commissions and the money made by PPC arbitrage players. Google has already switched and it is just a matter of time before Yahoo does as well.
Notice I don’t mention clickfraud – I don’t believe this impacts Google and Yahoo moving to a CPA model.
Email marketing
Email marketing is an area which is going to change on two fronts. CANSPAM is a law with many loopholes, one that allows people to send as much mail as they want under certain (not very restrictive) limitations. A lot of mail is being sent which does not provide true value to consumers, its simply mass market monetization that is driving volume, a process I really disagree with. At some point a new email law will be passed which requires something like "at the time of sign up, the sending FROM address must be displayed clearly so the consumer knows where they will receive mail from". And brokering of email data will be exclusive only. You join one list, you unsubscribe from that list, period. It’s only a matter of time until something like this is legislated. Don’t think so? A few years ago the telemarketing industry was doing great – now its been decimated with the FTC’s do not call rules. This kind of thing can happen literally overnight – look at how the online gaming industry has been affected recently.
Secondly, deliverability is going to get much more difficult. Right now, most ESP’s can get mail delivered almost anywhere except major ISP’s such as Yahoo and Hotmail. Reputation management is a new trend in email which will change this dramatically. Reputation management means that every IP address which is sending email is certified by an independent third party as to how that IP address is being used to send mail. It provides a lot of data to email receivers on exactly how that IP address is being used. If you’re certified and your reputation is positive, a lot of your mail will automatically be delivered. If you’re not, you’ll get blocked as spam.
Right now reputation management is being used by the major ISPs to confirm mail delivery – but once this is rolled out more widely across internet mail servers, mail blocking will improve dramatically, and those who are sending bulk co-reg data will find their deliverability falling through the floor.
Behavioural targeting
Thirdly, behavioral targeting is going to get much better. This has been talked about in the past, and never seems to truly work properly but it is starting to get much better now. Networks like Blue Lithium and turn.com are making a lot of progress with targeting and collecting a lot of data on their userbase. Reports I hear about Blue Lithium in particular are that it performs extremely well.
Impressive things are being done on the advertiser side to take advantage of behavioural targeting. For example, Think Partnership has a new product called Second Bite which saves shopping cart abandoners. If you decided not to buy a product and half completed your shopping cart, Second Bite will work to get you to finish your purchase. Think Partnership is just starting to buy banner inventory to save the cart purchase. What this means is that you can be browsing the web and you’ll see a banner saying "hey – come back and finish your purchase on and get a 10% discount". Once this kind of inventory is brokered out to major behavioural networks, no general interest CPA offer will be able to compete with the CPM’s they will be able to pay to save a purchase. Sure, this is a narrow application, but many more clever targeting applications of behavioural targeting will appear, increasing CPM’s across the board.
In addition, client side behavioral targeting will increase. By this I mean that users will allow more data to be mined from their computers locally, and some of it will be passed back to the network. In an extreme case, imagine if Microsoft made its Windows OS completely free – but in return for being able to mine behvioural data from your machine. This data would be fed back to online targeting networks such as Blue Lithium, to target web advertising more accurately. No popups or any other nasty applications would be included. That could be a huge value add for consumers – with free software AND better advertising. Yes, this has huge privacy implications, but over time these will be worked out – the ECPM increase from accurate targeting will be too valuable, and consumers will not mind their data being mined in aggregate.
That’s not to say that everything is bad. Some areas of the CPA and brokerage industry will continue to work well. These include:
1) Coupon and affiliate sites. Publishers that are actively going out and finding links to promote on their site for consumers will continue to make money and want to use CPA networks. The human interface in this instance provides tremendous value to consumers since the publishers truly understand what their market wants.
2) Newsletters. This will become the standard for email marketing as the more aggressive forms of email marketing will be made illegal. This is similar to coupon and affiliate sites where publishers will actively seek out links to target their audience due to their understanding of their market.
3) Web and chat spam is going to increase. Right now we’re seeing quite a bit of spam on myspace, and given the progress people are making on defeating CAPTCHA mechanisms, this will only increase. If the postings cannot be effectively blocked by computers, then more of it will be done. Unfortunately CPA networks will see more volume from various forms of aggressive webspam as time goes on.
The branding industry will have some impact on these, but it likely won’t change much from the way it is now – some inventory will be sold at higher ECPM’s for major brands, and the rest will be remnant inventory. Of course the big question is how high the ECPM’s can get for behavioural targeting and whether they can beat branded advertising.
Some people will read this article and be thinking to themselves "no, he’s wrong, this has always worked, and it will continue to work". The reality is that the internet marketing industry has been around for a very short time, and we really don’t have any data points to compare against long term. The right way to think about it is "where is the true value for consumers and advertisers". If your business model doesn’t provide true value to all stakeholders, then at some point what you are doing will stop working.
If your business model depends entirely on brokering, you may want to consider how you will operate in a few years time once the above become reality.
A good way to think about whether your business will be around in the future is simply by answering two questions:
1) By running my business, am I creating true value for all my stakeholders (customers, employees, consumers, partners)
And
2) Am I keeping up with the very latest trends that might affect my business, including industries that are not directly related to my daily focus?
For number 2, you can say you’re doing the right thing because you’re reading this. J
Does this mean that all CPA advertising and lead generation will go away? Of course not. These are very fundamental models and the backbone of internet commerce.
Just watch out if your business model is entirely focused around brokering remnant advertising. If this is your primary business, make sure you stay on top of your strategy. You don’t want your company to be made irrelevant like has happened with generations of blue collar workers in the past.
by Adrian Bye
Many people currently involved in the CPA industry feel that this industry is rock solid and not likely to change anytime soon. They may be in for a shock. There are developments coming from technological, business and legal areas which are going to have huge ramifications on the industry. One of those just happened.
Specifically I am referring the brokerage fees that CPA networks and brokers charge (around 20%) to push offers to fill the internet demand for remnant inventory, and the inefficiencies and expenses that are put in place by having so many humans involved in making web advertising work. Over time these people will be replaced by technology, just as many industries have been overturned in the past by modernization causing blue collar workers to lose their jobs.
The three biggest sources of traffic for a typical network are:
a. Email marketing
b. Pay per click traffic
c. Web inventory such as banners and text links
We’ll talk about these one by one.
CPA search marketing
Pay per click marketing is changing. Google has just announced it is going to offer a CPA model. At the moment it is possible to make a decent living by being good at PPC arbitrage of CPA offers. This works right now because Google and Yahoo have focused their business model around selling clicks, rather than selling actions. They do this because this is their version of branded CPM advertising – they can generally get more for it.
However, this causes huge inefficiencies in the system, because it is time consuming and complicated to figure out how to drive lots of PPC traffic, enabling therefore arbitrage opportunities.
Since Google has now started offering a CPA system, and Yahoo certainly will, this will change dramatically. Advertisers will be able to add a bunch of creatives into the system, along with a list of keywords and a CPA they are willing to pay. The system will then automatically test the base keywords you inserted, along with an extra list of keywords google generated itself. It will test them all against the various creatives you made; keeping pricing under a certain CPA you have set. The entire system will be fully automated, and the current arbitrage which is possible today will go away. Google and Yahoo can make quite a lot of money by making this change, given the average network commissions and the money made by PPC arbitrage players. Google has already switched and it is just a matter of time before Yahoo does as well.
Notice I don’t mention clickfraud – I don’t believe this impacts Google and Yahoo moving to a CPA model.
Email marketing
Email marketing is an area which is going to change on two fronts. CANSPAM is a law with many loopholes, one that allows people to send as much mail as they want under certain (not very restrictive) limitations. A lot of mail is being sent which does not provide true value to consumers, its simply mass market monetization that is driving volume, a process I really disagree with. At some point a new email law will be passed which requires something like "at the time of sign up, the sending FROM address must be displayed clearly so the consumer knows where they will receive mail from". And brokering of email data will be exclusive only. You join one list, you unsubscribe from that list, period. It’s only a matter of time until something like this is legislated. Don’t think so? A few years ago the telemarketing industry was doing great – now its been decimated with the FTC’s do not call rules. This kind of thing can happen literally overnight – look at how the online gaming industry has been affected recently.
Secondly, deliverability is going to get much more difficult. Right now, most ESP’s can get mail delivered almost anywhere except major ISP’s such as Yahoo and Hotmail. Reputation management is a new trend in email which will change this dramatically. Reputation management means that every IP address which is sending email is certified by an independent third party as to how that IP address is being used to send mail. It provides a lot of data to email receivers on exactly how that IP address is being used. If you’re certified and your reputation is positive, a lot of your mail will automatically be delivered. If you’re not, you’ll get blocked as spam.
Right now reputation management is being used by the major ISPs to confirm mail delivery – but once this is rolled out more widely across internet mail servers, mail blocking will improve dramatically, and those who are sending bulk co-reg data will find their deliverability falling through the floor.
Behavioural targeting
Thirdly, behavioral targeting is going to get much better. This has been talked about in the past, and never seems to truly work properly but it is starting to get much better now. Networks like Blue Lithium and turn.com are making a lot of progress with targeting and collecting a lot of data on their userbase. Reports I hear about Blue Lithium in particular are that it performs extremely well.
Impressive things are being done on the advertiser side to take advantage of behavioural targeting. For example, Think Partnership has a new product called Second Bite which saves shopping cart abandoners. If you decided not to buy a product and half completed your shopping cart, Second Bite will work to get you to finish your purchase. Think Partnership is just starting to buy banner inventory to save the cart purchase. What this means is that you can be browsing the web and you’ll see a banner saying "hey – come back and finish your purchase on
In addition, client side behavioral targeting will increase. By this I mean that users will allow more data to be mined from their computers locally, and some of it will be passed back to the network. In an extreme case, imagine if Microsoft made its Windows OS completely free – but in return for being able to mine behvioural data from your machine. This data would be fed back to online targeting networks such as Blue Lithium, to target web advertising more accurately. No popups or any other nasty applications would be included. That could be a huge value add for consumers – with free software AND better advertising. Yes, this has huge privacy implications, but over time these will be worked out – the ECPM increase from accurate targeting will be too valuable, and consumers will not mind their data being mined in aggregate.
That’s not to say that everything is bad. Some areas of the CPA and brokerage industry will continue to work well. These include:
1) Coupon and affiliate sites. Publishers that are actively going out and finding links to promote on their site for consumers will continue to make money and want to use CPA networks. The human interface in this instance provides tremendous value to consumers since the publishers truly understand what their market wants.
2) Newsletters. This will become the standard for email marketing as the more aggressive forms of email marketing will be made illegal. This is similar to coupon and affiliate sites where publishers will actively seek out links to target their audience due to their understanding of their market.
3) Web and chat spam is going to increase. Right now we’re seeing quite a bit of spam on myspace, and given the progress people are making on defeating CAPTCHA mechanisms, this will only increase. If the postings cannot be effectively blocked by computers, then more of it will be done. Unfortunately CPA networks will see more volume from various forms of aggressive webspam as time goes on.
The branding industry will have some impact on these, but it likely won’t change much from the way it is now – some inventory will be sold at higher ECPM’s for major brands, and the rest will be remnant inventory. Of course the big question is how high the ECPM’s can get for behavioural targeting and whether they can beat branded advertising.
Some people will read this article and be thinking to themselves "no, he’s wrong, this has always worked, and it will continue to work". The reality is that the internet marketing industry has been around for a very short time, and we really don’t have any data points to compare against long term. The right way to think about it is "where is the true value for consumers and advertisers". If your business model doesn’t provide true value to all stakeholders, then at some point what you are doing will stop working.
If your business model depends entirely on brokering, you may want to consider how you will operate in a few years time once the above become reality.
A good way to think about whether your business will be around in the future is simply by answering two questions:
1) By running my business, am I creating true value for all my stakeholders (customers, employees, consumers, partners)
And
2) Am I keeping up with the very latest trends that might affect my business, including industries that are not directly related to my daily focus?
For number 2, you can say you’re doing the right thing because you’re reading this. J
Does this mean that all CPA advertising and lead generation will go away? Of course not. These are very fundamental models and the backbone of internet commerce.
Just watch out if your business model is entirely focused around brokering remnant advertising. If this is your primary business, make sure you stay on top of your strategy. You don’t want your company to be made irrelevant like has happened with generations of blue collar workers in the past.
Thursday, March 1, 2007
Search, display to lead online ads past $60B
Search, display to lead online ads past $60B
With strong growth in online display ads and paid search advertising, investment bank Jefferies & Co. is predicting that online advertising will surpass $60 billion by 2010. Last year, Jefferies & Co. predicted the online ad spend would reach only $54 billion by 2010.
by Kristina Knight
According to the report, by 2010 keyword search is expected to be the most popular form of online advertising, accounting for 40% of the online ad spend. Display advertising is expected to account for 21%, classified advertising (20%), referrals/lead generation (7%) and Rich media (6%) round out the top five. Sponsorship (4%) and email advertising (2%) will also stay in the mix.
The estimate is among the more optimistic for online spending. In fact, earlier this week, eMarketer predicted a slight slowing in online advertising. Though still expecting 19% growth this year, eMarketer predicts an overall slowing as online spending catches up with traditional advertising spending.
Jefferies isn't buying into the eMarketer report, however, saying that paid search will lead online growth. They expect 25% compounded annual growth in paid search through 2010, leading all ad spend categories. In 2006, search ads accounted for $14 billion across the globe; that is roughly 46% of all online ad dollars. Display and brand ads, according to the report, will show 19% compounded growth through 2010. Even with strong growth, the online ad spend is only expected to account for 10% of all U.S. advertising by the end of the decade. Current online advertising accounts for 6% of the total ad spend.
Tags: advertising forecast, online advertising, online advertising revenue, online marketing
With strong growth in online display ads and paid search advertising, investment bank Jefferies & Co. is predicting that online advertising will surpass $60 billion by 2010. Last year, Jefferies & Co. predicted the online ad spend would reach only $54 billion by 2010.
by Kristina Knight
According to the report, by 2010 keyword search is expected to be the most popular form of online advertising, accounting for 40% of the online ad spend. Display advertising is expected to account for 21%, classified advertising (20%), referrals/lead generation (7%) and Rich media (6%) round out the top five. Sponsorship (4%) and email advertising (2%) will also stay in the mix.
The estimate is among the more optimistic for online spending. In fact, earlier this week, eMarketer predicted a slight slowing in online advertising. Though still expecting 19% growth this year, eMarketer predicts an overall slowing as online spending catches up with traditional advertising spending.
Jefferies isn't buying into the eMarketer report, however, saying that paid search will lead online growth. They expect 25% compounded annual growth in paid search through 2010, leading all ad spend categories. In 2006, search ads accounted for $14 billion across the globe; that is roughly 46% of all online ad dollars. Display and brand ads, according to the report, will show 19% compounded growth through 2010. Even with strong growth, the online ad spend is only expected to account for 10% of all U.S. advertising by the end of the decade. Current online advertising accounts for 6% of the total ad spend.
Tags: advertising forecast, online advertising, online advertising revenue, online marketing
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