Thursday, November 29, 2007

Looking To 2008




By Dave Morgan

I've decided to try to get a jump on prognostications for 2008. With the end of November upon us and fourth quarter revenue all booked, it's a good time to think about next year. What do I expect 2008 to bring? I can start with the easy things.
One, the online ad market will grow a lot. Sure, some folks are worried about a general economic recession, and maybe an ad recession particularly, but even if it happens it is only likely to have marginal impact on the online ad market. ROI is a watchword of this market. If marketers pull back ad spend, they will have to keep a strong percentage on channels that drive sales -- that is, online advertising. If things are good next year, we will grow by 26%. If they are not so good, that growth may drop to 23%.

Two, we will see more video. Broadband penetration keeps growing and sight, sound and motion excites audiences. We will see more video content and more video advertising. That one is easy.
Three, we will see more mobile advertising. The number of smart phones and phones that can surf the Web is growing fast. That means more mobile surfing, more mobile content and more mobile advertising. This week, Verizon announced that it was going to start opening up its network to non-Verizon-sold devices. This is on top of its announcement to support Google's new "open" mobile software, Android. Watch this space. If we see teleco networks and device manufacturers and digital content and ad networks truly embrace open standards, this space will explode. It won't happen next year, but certainly some of the key elements will be put in place.

Finally, we will see more user-focused advertising. Certainly, we are not ready for a one-to-one world. That has been long promised and is very far out on our horizon, even now, but we are going to see more focus on ads that are delivered to the person and not just the page or place. Registration-based targeting and behavioral targeting have been drivers here, but we will see more.

What will these developments mean for folks in the industry? What else should we expect? I'm also certain that we are going to see an extraordinary amount of noise next year. There are so many companies, so much money, so much "certainty" about the development of this market, with tens and tens of billions of dollars of spend, that we are certain to hear more and more hype all year about it.

What will that mean for us trying to run online ad businesses? 2008 will be a year of "focus." The long-term winners will sit out the hype, will double-down on their past winning strategies, and will drive their businesses hard and ignore all of the noise. 2008 will be much like 1999. Some companies will stay focused and will be long-term players. Some companies will worry much more about what the pundits and bankers think and may find themselves on the sideline. It's going to be a crazy year. What do you think?

Dave Morgan is Executive Vice President, Global Advertising Strategy, for AOL, LLC.