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Ten Key Online Predictions for 2008

eMarketer has issued predictions for 2008 in key online areas, including those related advertising, videos, social networks, e-commerce and entertainment, saying online advertising will ride out potential economic storms in the U.S. - and YouTube will decide political elections - reports MarketingCharts.

The 10 predictions for 2008 according to eMarketer:

1. Online ads remain resilient.
2. Video surge slows.
3. Social-network advertising hits $1.6 billion.
4. Networking goes beyond MySpace and Facebook.
5. YouTube decides the election.
6. Beijing Olympics pumps up ad spending.
7. Buy online, pick up in-store becomes expected feature.
8. Movie downloading hits the mainstream.
9. Music marketers roll out new business models.
10. Dynamic ads heighten gaming revenue potential.

Online Ad Spending (see chart, 2001-2011)

Overall U.S. online ad spending will be surprisingly resilient, even if the economy slides into a recession. With money tight, marketing executives will continue to gravitate toward the internet, looking for more measurable ad formats to buttress their positions.

Video Ad Spending (see chart, 2001-2011)

The surge in online video growth is expected to slow in 2008 with a 74 percent growth (down from 89 percent in 2007) and a spending increase of $1.35 billion.

In 2008, the array of video available online will jump dramatically, both from professional content producers - such as TV networks - and from of amateurs churning out user-generated content.

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

However, ad dollars on video will remain small relative to the total US online ad spending.

Social-Network Advertising  (see chart, 2005-2011)

U.S. ad spending on social networks will climb to $1.6 billion in 2008, from $920 million in 2007 - a 70 percent growth rate.

Although targeted advertising is getting the lion’s share of attention and will continue to be hot in 2008, other forms of social-network marketing, such as search advertising, widgets and e-commerce, will draw marketer interest.

In addition, self-serve advertising systems will create a new market for local and small businesses to promote themselves via social networks.

Social Network Usage

Social networking will remain a key online activity, with 44 percent of U.S. consumers using social networking at least once a month in 2008. While MySpace and Facebook will continue to dominate the market, changes are taking place that will extend social networking activities beyond a single destination site.

Profiles will eventually become portable, meaning consumers need only create one and be able to use it in many places on the web. Widgets that today work with only one social-network site will be designed on an open platform, extending their reach.

Activities such as online shopping, searching and even sending email will be enhanced with social-networking features.

YouTube and Politics

YouTube attracts the most online traffic and is consistently rated the favorite social media site by U.S. Internet users. (see chart of U.S. internet users’ favorite social media sites.)

YouTube will play a decisive role in the 2008 U.S. presidential election by either airing a user-submitted clip that embarrasses a leading candidate or setting the tone of the campaign through its series of sponsored debates.

Beijing Olympics

Events of 2008 - the Beijing Olympics, along with the U.S. election - will spike advertising spending in all channels but will give a particular boost to the online sector.

As the internet market matures, the growth rate of online ad spending will taper off, dipping to under 30 percent in 2007 for the first time since 2004. But in 2008, growth will surge upwards to 29 percent, before declining to 18 percent the next year.

The Olympics will also mark the “coming out” party for China and become an important milestone for the country’s economic and political development.

The competition will be fierce on and off the sporting field as multinational organizations try to tap into China’s growing middle class.

E-Commerce

Multichannel retailers will begin rolling out more “buy online, pick up in-store” services, joining big-name retailers such as Circuit City, JC Penney and Sears. Consumers like the service because it allows them to avoid shipping fees.

A Forrester Research survey found that 79 percent of multichannel retailers ensure consistent pricing across their channels.

An Internet Retailer study found that three-quarters of retailers link their e-commerce systems to their fulfillment and order management system.

Movie Download Spending (see chart, 2006-2011)

U.S. consumer spending on movie downloads will more than double from 2007 to 2008, from $114 million to $245 million.

The result is that digital services, such as iTunes, Netflix, Amazon Unbox, Movielink/Blockbuster, Vongo and others will become more popular with the mainstream.

Music Marketing (see chart, 2006-2011)

Music labels and marketers will step up their experimentation with new and emerging business models as the CD continues to fade away. Worldwide recorded music spending has declined year after year - from $32 billion in 2006 to $28 billion in 2008, hitting a low of $26 billion in 2011.

Expect to see more ad-supported sites, monthly subscription services, full-track mobile download offerings and use of social networks as music discovery and sales tools.

Gaming

Old videogames will have new life breathed into them by companies such as Double Fusion, which serves ads in real time.

Advertisers will purchase advertising that is served on free casual games that consumers download.

The same concept will apply to console games distributed online for Xbox and Wii, with firms such as Microsoft’s Massive providing the technology.