AdweekMedia Forecast 2010 – Digital

(ADWEEK) The tricky thing about any sort of forecast for 2010 is that even though the recession appears, at least on paper, to be near an end, this was no ordinary recession for the media business.

“It’s difficult to separate what’s cyclical and what’s structural,” says eMarketer CEO Geoff Ramsey. That’s undoubtedly true for media like newspapers and radio, which have felt the earth shake beneath them this year. But it’s also true for a still-maturing medium like digital.

Overall, eMarketer predicts that online advertising spending will increase by 5.5 percent to $23.6 billion in 2010, reversing a 4.6 percent decline last year. But all won’t be well on the Web, which has seen several major issues exposed and exacerbated by the recession. As it turns out, not all traditional brands love banner advertising. There is still far too much display inventory out there. And even the red-hot video segment lacks a sure business model.

Most buyers and sellers at least expect that the ad marketplace should be slightly more organized and predictable than in 2009, when clients released budgets late and then often made frequent cuts. However, the recession may have spurred some brands to permanently change their Web-buying patterns, believes Brad Davis, svp, West Coast multimedia leader for Disney Online.

“We’ve really seen a mix, with some clients planning way far out in advance, as far ahead as Q4 [of 2010]. And then we’ve seen a continuation of holding onto the cash until the last minute, and then a quick release of this cash,” says Davis. “With the variety of options [buyers] have in the marketplace, this is going to be part of the new reality.”

That variety of options dynamic isn’t likely going to change this year, regardless of whether the economy bounces back. “The difference between the Internet and traditional media like TV is that there are infinite possibilities” online, says Scott Schiller, svp of ad sales, Comcast Interactive Media. “Why would that change in 2010?”

That likely means that ad networks aren’t going anyplace. And exchanges and demand-side buying platforms are poised to play an even bigger role in 2010. All that suggests that it’s going to continue to be tough for midsized publishers who are committed to traditional, brand-oriented direct selling.

“Advertising cannot support all the content that is out there … so you have this sagging middle,” says Ramsey.

Which is why he and others expect that 2010 will likely be the Year of Experimenting With Pay Models. That’s clearly a priority for newspaper Web sites, and may be for several top video sites like Hulu.

Tracey Scheppach, svp, video innovations director, Starcom Worldwide, hopes that sites like Hulu and YouTube don’t prematurely impose restrictive subscription models, though she acknowledges the medium’s major challenge.

“A huge issue in online video is, ‘What is the business model?’ We’re going to make progress, and I wouldn’t bet on what it’s going to be,” says Scheppach. “But every piece of research I’ve seen says that people want free, ad-supported video.” One way the online video model can be improved is by establishing a standard creative unit. That is the goal of The Pool, Starcom’s ongoing research project, which will reveal its first findings in February.

eMarketer predicts that video spending will surge by a healthy 40 percent in 2010 to $1.4 billion. Still, that figure pales in comparison to the $11.4 billion in spending expected to go to search, still the medium’s dominant sector. Yet the steady search space will also see change in 2010 as Microsoft and Yahoo’s partnership finally takes hold, and Microsoft continues to push Bing.

Nicola Smith, supervisor of emerging trends at Moxie Interactive, predicts that the recent deals that both Microsoft and Google made with Twitter will also impact the segment. “The incorporation of social media into search is really going to help filter and optimize the types of content we’ll get as users,” she says. “It’s only going to strengthen [search engines’] appeal.”

Many in the digital media space are hopeful that display advertising can be improved dramatically by becoming a lot more like search through advanced targeting technology and data collection. However, for that to work, the industry must stay ahead of a regulation-minded administration in Washington — something to watch closely in 2010. “We will be going backward several steps if we don’t,” says Ramsey.

Another hot issue for the new year is the same hot issue from the past few years: Just how does social networking fit into the digital media mix? Many contend that while nearly every major advertiser is interested in social media in some fashion, the true value for brands on sites like MySpace and Facebook lies in customer retention and analytics, rather than as vehicles for display ads. “Monetization is still going to be a struggle for these sites,” says Smith.

Of course, no digital forecast is complete without someone extolling mobile’s potential for the coming year, and someone else tempering that prediction. 2010 is no different. Per eMarketer, mobile ad spending should jump by 42 percent this year; yet the medium represents just 3 percent of digital spending.

But at the very least, “in certain categories, mobile will have a definite seat at the table,” says Schiller. “Media buyers like to buy what they know and understand. And every one has a Blackberry and iPhone.”

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