Clicking into the Future: Predictions for 2007 to 2008
Predictions for 2007
1. Google's early entry to radio advertising will bear fruit prompting Google to start examining television advertising.
When it comes to the allocation of advertising dollars, Google fundamentally altered the rules of the game. In the past, mass market advertisers would gamble on a shotgun approach to ad-spending. The options consisted of newspaper, magazine, telephone directory, radio or television. While each medium could provide statistics showing their print-run and audience, tracking the success or failure of these types of advertising has always posed a problem for manufacturers and retailers. When Google popularized the pay-per-click model in which advertisers only pay when a person actually views the ad, a new model was born.
Google's billing model will have to alter slightly to meet the radio and video formats however, as digital radio and television becomes the norm, tracking will become far easier. Google will be able to charge by the listener or viewer though it remains to be seen if listeners or viewers will actually listen to or view advertisements on digital radio or television.
2. A consortium of major newspapers and publishers will form a consolidated advertising group to combat Google. The initiative will fail.
In 2006, Google literally sucked much of the money out of the pool of resources shared by publishers on or offline. With its venture into newspaper advertising, Google has threatened the classic golden goose of traditional news publishing, the classified ad section. News gathering organizations, already reeling from a loss of advertising income to other facets of the online marketplace should band together much as several airlines have to reduce cost and difficulties booking tickets. The newspapers and magazines could easily promote local, regional, national and even international advertising opportunities at a much lower cost than they could individually. If they can band together to undercut Google's costs is another question however they will either figure out how to collectively raise advertising income or they will become Google advertising affiliates.
3. Congress will initiate an open investigation of pay-per-click advertising models.
We already know of closed-door congressional inquiries into the PPC market. Stemming from the AIT vs. Google case, we have learned of FBI and Secret Service investigations, and in-camera hearings before congressional committees. We also know of at least two republican and one democratic senators interested in opening further investigations.
How this one plays out is a mystery, but it will likely play out this year. Thus far, the investigations have been kept behind closed doors, a silent testimony to the strength of Google's lobby effort in Washington DC. No matter how talented and strenuous the lobby, an investigation of Click Fraud will be made public sometime this year.
4. An investigation of pay-per-click advertising models will threaten Google's stock values.
5. Google will drop below $450 before the end of first quarter 2007. If Google drops below $425, watch for a major landslide in California.
The market is softening. With expected slowdowns in the housing, building, manufacturing and retail sectors, tech investors are showing signs of skittishness going into 2007. The first part of January is traditionally a time when the market readjusts to decisions made by investors in the last weeks of December. Many sell shares towards the end of the year in order to clarify their incomes for tax time. This year, a number of analysts have advised clients to unload some of their Google shares as a hedge against an expected downturn in share values.
While Google remains far above the $450 range, expect it to drop to around $450 by mid-March. It's earnings to assets ratios are way too extended and though it has better prospects than any of its competitors, the search advertising market is changing rapidly. The only thing that saves Google from dropping is rapid entry into the television advertising market. The first signs of a weakening AdWords market will be the catalyst of the first round of a Goog landslide. If the share prices hit $425, watch for major selling. If it goes below $400, buy a boat.
6. Yahoo will find focus and direction.
Having freed itself from the sticky peanut butter mess it found itself in late 2006, Yahoo has made the first steps towards reorganizing their messy organization. The battle between Hollywood and Sunnyvale has been settled with the geeks coming out on top of the agents. This year is Yahoo's year to stage a serious comeback or to languish into obscurity. I suspect the former. However, all the major algorithmic search engines will face a new challenger this year
7. The major search engines will face a new and socially adept competitor this year.
Wikipedia founder Jimmy Wales has hooked up with Amazon to produce a human-powered search engine that will be released sometime in 2007. This collaborative effort to dethrone Google will be moderately successful. Wikisari will quickly become one of the biggies, but Google will still be king.
8. 2007 will be the year Internet marketers discover the power of online video.
The use of video will become a standard component of online communication. Advertisements, long-distance conferencing and public relations in general will be affected. The advancement of video online will set the stage for a major realignment in the traditional entertainment industry.
9. DIY Infotainment Distribution for fun and profit.
Using tools like the Yahoo Publisher Network, YouTube, Flickr and distributed podcasts, webmasters and private websites will start to replace professionally developed network broadcasts as an information and entertainment source.
Add efficient monetization to the mix through Yahoo Search Marketing ads and you have an effective enticement for adventurous webmasters to try entering the market.
10. YPN will see challengers this year.
While the Yahoo Publisher Network is by far the most advanced program of its kind, expect to see other search entities introducing their own webmaster friendly monetized information and entertainment distribution programs.
11. The search marketing environment will further fragment with the following sectors seeing;
- stronger gains: Video, Social Networking, Niche marketing, Vertical search
- weaker margins: Traditional domain-driven SEO, Small-scale PPC
12. Changes to the SEO Billing Model
Many traditional SEOs will be forced to adopt PPC style billing. Fees will be charged based on the success of a campaign as opposed to flat fees charged up front or on a monthly basis. Greg Boser has written and commented on this several times, most recently in a conversation with WebmasterRadio's Daron Babin on the last Rainmaker show of 2006.
13. Consolidation in the Search Marketing Sector
In 2007, financial pressures faced by firms in the SEO part of the search marketing industry will produce a sector that looks very different from the one we work in now. Watch for consolidation between allied SEO, SEM, Public Relations and link-building firms as clients demand full-service vendors.
14. Hasty La Vista
Early Microsoft Vista users will eat a number of worms, catch a bunch of viruses and end up as Zombies. As a result, savvy IT departments put off the update until Microsoft can prove it has created a master-patch.
15. Patch This Microsoft
That big patch will be ready for download in 2008, effectively delaying the rollout of Vista for another year.
2 Bonus Predictions
16. Duke Nukem Forever
Duke Nukem Forever will be noted as the greatest game that never was.
17. Planet Fortune
Webmasters will have more rewarding opportunities this year than ever. 2007 will see the fruition of several major initiatives started in 2005 or 2006 such as the YPN, online video advertising, and the combination of on and offline advertising. With the largest public relations and marketing firms in the world taking serious note of search, the search marketing industry will be truly considered part of the mainstream ad industry. This will empower webmasters as more attention, energy and assistance is directed towards helping webmasters present interesting content framed by increasingly expensive advertising. There is a lot of fortune to be found online this year and much of it will trickle down to the grassroots.
2007 is going to be an intense and interesting year. Next week, we'll take a look at how I did in my 2006 predictions.
Questions and Answers
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