eMarketer's Predictions for 2009 - eMarketer
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eMarketer's Predictions for 2009

What lies ahead in the new year?

December 16, 2008

David Hallerman, Senior Analyst

Online Ad Spending: Still Solid Choice

Video ad spending will run counter to overall economic developments, rising by 45% in 2009 to reach $850 million. Two key factors support this trend.

First, the sharp escalation of professional video content on the Web—mainly from TV networks—is creating a viable base for brand marketers.

Second, even though most advertisers are increasingly cautious with their budgets, they still need to reach online audiences and woo their shrinking wallets with messages that reach their hearts and minds—hence, more video.

US Online Advertising Spending, by Format, 2008-2013 (millions)

Search marketing spending will grow by 14.9% in 2009, to $12.3 billion. Search marketing is not recession-proof, but it is recession-resistant. Two basic assumptions support this eMarketer projection. Search is highly measurable, so it will maintain its place in many budgets and increase in some others, as advertisers look for secure and effective methods to combat fear in an economic meltdown.

Also, consumers—who monetize search ads by deciding whether or not to click—will take money off the table by shopping less, and put money back on by searching for deals. Although search advertising will grow less in 2009 than in any previous year, its inherent strength will mean greater spending gains than for any other major form of advertising, whether online or offline.

Total US Internet ad spending will increase to $25.7 billion in 2009, an 8.9% growth rate. That will be the lowest year-over-year increase for online advertising ever. Yet it will still be a robust increase compared with nearly all other media.

Lisa E. Phillips, Senior Analyst

Demographics: Multicultural Ads Ascend

Multicultural marketing will gain intensity online. Although white Americans make up about 70% of the US Internet population, more and more African-Americans and Hispanics are going online, through their PCs and their mobile phones. Marketers will follow, targeting these segments with language- and culture-specific messages that evolve from their general-market campaigns.

Market Segments Targeted by Multicultural Marketing Programs According to US Marketers, 2003 & 2008 (% of respondents)

Ageism is out, online. Some 55% of US adult Internet users are over age 40, according to Harris Interactive.

Although Internet penetration within the 40-and-over crowd is lower than among younger demographic groups, boomers and seniors outnumber younger adults in the general population—so that lower Internet penetration still translates into greater numbers of older Internet users, according to comScore Media Metrix.

US Internet Users, by Age, September 2008 (thousands and % of total)

While younger Internet users go online for entertainment, older users are more practical in their online usage. Smart marketers will target older Internet users with special offers, uncluttered Websites and ad messages, and lots of product information.

Jeffrey Grau, Senior Analyst

Retail E-Commerce: Record-Setting Declines

Online retail sales (excluding travel) will grow by only 4% in 2009—the first full year to feel the impact of the economic crisis.

Over the long term, online sales growth has been on a downward slope as the number of online buyers approaches saturation. So, the economy accentuates an existing trend. Most retail e-commerce sales growth in the future will come from increased spending by consumers who have long been online buyers.

US Retail E-Commerce Sales, 2007-2012 (billions and % change)

Debra Aho Williamson, Senior Analyst

Social Networking: E-Commerce a Revenue Stream

E-commerce will be a growing revenue stream for social network sites. Expect both MySpace and Facebook to enhance their self-serve advertising systems to allow consumers and businesses to buy and sell real-world goods and services.

With US ad revenue growth slowing, smaller and niche social networks will have a tough time gaining traction and several may close up shop or be acquired by larger players. In addition, marketers that have built standalone social networks tied to their brands will either close them or migrate them to existing social network platforms where they can reach a broader audience.

Facebook, already a de facto business networking site because of the number of businesspeople who use it, will develop ad programs aimed at B2B companies. This will directly affect LinkedIn.

Twitter may have turned down Facebook’s all-stock offering in late 2008, but it will still end up being acquired. The company that buys it will use the Twitter infrastructure to offer targeted marketing and analytics to advertisers.

Carol Krol, Senior Analyst

Traditional Media: Continues Hurting

Newspaper advertising will continue to decline in the new year more than any other medium. Industry-wide cutbacks will continue, and there will be some consolidation. The industry was limping before the recession; expect more newspaper companies to become casualties.

In October, the venerable Christian Science Monitor became the first national newspaper to announce its move to a Web-only daily strategy beginning in April 2009. It won’t be the last. Some newspapers will also reduce their publishing frequency.

eMarketer estimates that US TV ad spending will decline 4.2% to $66.9 billion in 2009. This drop in spending reflects not only expectations of a continued poor economy but a seismic shift in the way TV ads are bought and sold.

US TV Advertising Spending, 2007-2010 (billions and % change)

Fragmentation on TV and declines in viewership have made it more difficult for advertisers to reach audiences. Broadcasters will be pressed to redefine their businesses in an increasingly digital world. They will focus on expanding programming to the online realm and will continue to test business models.

The 800-lb. online video gorilla, YouTube, announced in Q4 2008 that it would carry full-length television programs supported by ads. Expect to see similar properties compete with it in 2009.

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