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Outlook bright for online advertising

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Online advertising will continue to grow in 2008 as b-to-b marketers increase their spending on search and online video, and experiment with new social media platforms.

Other top online advertising trends this year will include the evolution of online ad platforms through acquisitions and technology developments, and the creation of standard measurement practices, according to industry experts.

"The No. 1 issue on the minds of everyone in the various segments of the industry is how the ecosystem itself is going to evolve," said Randall Rothenberg, president-CEO of the Interactive Advertising Bureau.

"There are a number of major companies positioning themselves as ad platforms and looking to add value up and down the value chain. The evolution of Microsoft, AOL, Yahoo and Google, through a combination of technological developments and acquisitions, is having a transformative effect on the landscape."

At its annual meeting in February, the IAB will release the second phase of its "Marketing-Media Ecosystem 2010," a joint research project with the Association of National Advertisers, the American Association of Advertising Agencies and Booz Allen Hamilton.

The project partners are examining the evolution of the marketer, agency and media landscape, including where value is being created, what gaps still need to be filled and emerging best practices.

"A significant part of the IAB's strategy for 2008 will be exploring and exposing emerging practices in the ecosystem 2.0," Rothenberg said.

This year, online ad spending is expected to reach $27.5 billion, up 28.5% over last year, according to Internet research firm eMarketer.

The spending will be driven largely by paid search engine advertising, which is expected to total $15.5 billion this year, up 31.9% over last year, eMarketer projects.

Marketers will also spend more on newer ad platforms, including online video, which is projected to reach $1.4 billion this year (up 74% over last year), and advertising on social networks, which is projected to reach $1.6 billion this year (up 70% over last year), according to eMarketer.

"B-to-b marketers will be experimenting more with social media," said Lisa Phillips, senior analyst at eMarketer.

"Business executives are looking for more interaction and advice from their peers, and they are turning to the Web for that, as well as face-to-face events. That is one reason why social networks have become so big."

Phillips said other trends for b-to-b marketers this year will be investing more in their own Web site development, particularly for manufacturing companies; increased use of rich media; and more online video.

"There will be a lot more use of online video ads by b-to-b marketers. Video is becoming a way for people to find out about a product and how it works, particularly for b-to-b products," she said.

She added that marketers are still struggling to find ways to measure ROI on social media, blogs and other emerging platforms.

Rothenberg said measurement of online advertising will continue to be an important issue this year for advertisers, agencies and media companies.

"In 2007, we had a groundbreaking coming to terms with the two major measurement companies—comScore and Nielsen//NetRatings—with both companies agreeing to undergo independent third-party audits," he said.

"This is a very important next step for them, and we'll continue to keep an eye on the progress of those audits; and we will continue to work with the measurement companies to educate the business environment about various ways measurement can be done and various ways value can be found."

In November, the IAB hosted its first audience measurement leadership forum, an event for marketers, media companies, ad agencies and research companies to explore different measurement methodologies and issues.

The IAB also announced plans to work on audience measurement guidelines, in conjunction with the Media Rating Council, including definitions for unique visitors, page views and time spent, as well as a review of the impact of cookie deletion, international traffic, spiders, bots and other factors on audience measurement.

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