Among the numerous lists and predictions making the pre-holiday rounds online comes another forecast of a bright and profitable market for online ads.
$26.4 billion in 2006, $33.2 billion in 2007. Those are the numbers being bandied about by investment firm JMP Securities for global spending on online advertising. Reuters rounded up several analyst forecasts about the market. Even the most conservative estimates call for billions of dollars going from marketers to the Internet.
That’s not exactly great news for media like television or newspapers, the latter having seen circulation declines, fewer advertising dollars, and the need to layoff scores of people.
This is one of those situations where the hackneyed phrase “paradigm shift” really does apply. Reuters cited JMP analyst William Morrison: “We expect large-budget advertisers to continue shifting an increasing percentage of their traditional ad budgets to the Internet.”
JMP’s enthusiasm derives from a Forrester Research report that claims “those who have the Internet are spending more than 30% of their media time nowadays online.” Yahoo and its network of sites seem to be the destination of choice, as Nielsen//NetRatings said in the report 104 million unique visitors Yahooed in November.
MSN and Google brought in 91 million and 85 million visitors for the month, respectively, while Google’s new buddy AOL drew 74 million.
The AOL deal with Google, where Google bought a 5 percent stake in Time Warner’s online division for $1 billion, looks like it could drive the next shift in online advertising.
AOL wants to reach Internet users with graphical ads, not just the familiar text-based contextual ads seen on Google’s search pages. Part of the agreement will speed up what Google claimed was a planned change anyway: placing graphical ads on its search result pages.
As online advertisers shift more dollars to the Internet, there’s going to be considerable competition to stay ahead of the other guy. Graphical ads will likely cost more than text ones, and bidding for the most desired keyphrases should follow that price rise.
You could say that the online ad “picture” will change by more than just the money being spent for it.
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David Utter is a staff writer for murdok covering technology and business.
