According to a new report by JP Morgan’s Imran KhanWhile, entitled “Nothing But Net”, online ad spending is projected to continue to grow.
However the report warns that the contraction of the general economy will put even greater downward pressure on the price of both online display and search advertising.
“Although the economic news cycle is largely negative, we believe the longer-term secular trends that are driving the growth of online activity remain quite positive, and we expect these trends to help Internet companies continue growing even as overall economic activity remains sluggish,” Khan wrote in the 2009 edition of his annual .
He cited the expansion of broadband penetration as an important catalyst for more robust “commercial Internet activity,” and said that would continue to accelerate consumer usage and adoption of the medium in ways that would impact other industries and aspects of the economy, especially the retail industry, which increased broadband usage would correlate to increased ecommerce growth and a corresponding decline in “brick-and-mortar” retail businesses.
Khan predicted that the fourth quarter of 2008 and the first quarter of 2009 would prove to be the toughest financial quarters for the online industry, and that the Internet economy would begin to rebound in the second half of 2009.
The economic pressures, he predicted, would also drive a greater share of online advertising investments toward “performance-based” advertising models and away from traditional “CPM-based” models, and that in turn would contribute to the downward pressure on online CPMs during 2009.
“We now think 2009 will be a weak year for graphical advertising publishers, as we expect the graphical ad sector to under perform, performance based advertising in a down economy,”
Khan predicted the display ad marketplace would grow about 6% in the U.S., and about 6.7% worldwide in 2009.
While online search ad spending is projected to expand at roughly twice that rate, Khan predicted that general economics would also contribute to lower keyword prices and less revenue per search query for the major search engines in 2009.
online traffic to continue to grew keywords prices to bid down.
exactly stated by the domains visionary rick schwartz several weeks ago on his blog.your traffic is valuable with none of the convential overhead.and the internet is one of the very few growing industries.another reason for ppc transparency the value of your click is valable to the upstream provider predominately g.
I think more continued PPC inventory has been knocking down PPC prices as well.
However, it would appear to me that the pool of good domains is drying up in the droplists as it has been for a year or so. I has to end sometime….good domains won’t be dropping forever.
When new inventory dries up and as pages get developed that have nothing to do with PPC and are thus removed from the inventory of ad space pressures will begin to mount for quality ad space that will then be limited.
Hold on a couple, three more years folks!