eMarketer’s Predictions for 2008 – Part I

DECEMBER 27, 2007 – What will the new year bring?

Ben Macklin, Senior Analyst

Ad Spending

The Beijing Olympics and US presidential election will ensure that advertising spending will spike in 2008 across all sectors. The Olympics marks the “coming out” party of China. As was the case with South Korea in 1988, the games will be an important milestone for China’s economic and political development. The competition will be fierce both on and off the sporting field as multinational organizations try to tap into China’s growing middle class.

Politics Online

In the recent Australian election, a video appeared on YouTube that showed the prime minister-elect, Kevin Rudd, eating his ear wax. It didn’t prevent him from winning the election, but it dogged him throughout the campaign. YouTube and the Internet in general will be an important battleground in the 2008 presidential election campaign in the United States. The influence of online-advocacy groups will continue to grow.

David Hallerman, Senior Analyst

Online Video

Internet video will produce more light than heat. That is, the array of video available online will jump dramatically both from professional content producers, such as TV networks, and from the growing panoply of amateurs. However, the heat of ad-spending dollars will remain small relative to the entire US online ad-spending universe.

Various large online video players, such as Google, Microsoft and the TV networks, will fortify their video offerings by buying small, ad-related companies.

Search Engines

At least one search engine will stop fighting the giant and farm out the bulk of its sponsored-link (a.k.a., paid-ad) results to Google.

A deal between Microsoft, Yahoo! or AOL (pick two of the three) will take place before the third quarter, but Google will still increase its share of ad revenues relative to those portals.

Online Ad Spending

Overall US online ad spending will be surprisingly resilient, even in the potentially recessionary economy. With money tight, marketing executives will continue to gravitate toward the Internet, looking for more measurable ad formats to buttress their positions.

Debra Aho Williamson, Senior Analyst

Social Networking

About 44% of US consumers will use social networking at least once a month. Although MySpace and Facebook will continue to dominate the market, changes are afoot that will extend social networking activities beyond a single destination site and into many other facets of the consumer Internet experience.

Profiles will eventually become portable, meaning consumers need only create one profile and be able to use it in many places on the Web. Small applications or �widgets� that today work with only one social networking destination site will be designed on an open platform, extending their reach. Activities such as online shopping, searching and even sending e-mail will be enhanced with social networking features.

Social networking will remain a key online activity regardless of the individual performance of MySpace or Facebook.

US ad spending on social networks will climb to nearly $1.6 billion in 2008, from $920 million in 2007. Although targeted advertising is getting the lion’s share of attention and will continue to be a hot button in 2008, other forms of social network marketing, such as search advertising, widgets and e-commerce, will draw increased marketer interest. Additionally, self-serve advertising systems will create a new market for local and small businesses to promote themselves via social networks.

James Belcher, Senior Writer

Video Games

Old video games will get a second life thanks to software from Double Fusion and other firms that can place ads retroactively into old games, which will then be placed online for free distribution to players.

The same concept will apply to console games distributed online for Xbox and Wii, although other firms such as Microsoft-owned Massive will provide the technology.

Part II of this article will be published tomorrow, Dec. 28.

About eMarketer

By gathering the latest research and news from over 1,000 sources, eMarketer has established itself as the world’s leading provider of internet and e-business statistics. eMarketer’s Web site is at www.emarketer.com.