Search, video and Web 2.0 applications this year will drive online advertising, according to eMarketer. On Jan. 1, the research company released a report projecting that online ad spending will reach $19.5 billion this year, up 18.9% from last year.
"One of the trends this year will be the persistence of paid search as an effective form of online advertising," said David Hallerman, analyst at eMarketer.
"More new advertisers are coming in, and search is being used more and more by companies to promote their brands, not just for direct response."
Search will make up 42.5% of total online advertising in 2007, eMarketer projected.
Hallerman said online video will be another big trend this year as marketers figure out the best ways to use it. "There are a lot of advertisers who are looking at it or experimenting with how best to do it, such as repurposing existing ads, attaching a video ad pre-roll (to online video content such as a news report) or running it as a banner ad," he said.
Publishers are faced with the challenge of serving up more video content on which advertisers can place ads, Hallerman said.
"Google's purchase of YouTube will open up the opportunity for more inventory as they figure out a way to monetize that revenue stream," he said.
While still making up a small portion of total online ad spending, online video ad spending will grow 89% this year to $775 million, eMarketer projected.
Maria Mandel, partner-executive director of digital innovation at Ogilvy, New York, said online video will receive more interest from b-to-b advertisers this year. "You will see a lot of experimentation outside of pre- and post-roll, with more user-initiated types of video," she said.
She said user-initiated videos (in which users elect to play a video rather than having it play automatically) will become more common this year as publishers install user-initiated video ad units on their sites.
Mandel said another trend to watch this year is video search.
"Search will expand beyond text-based and video-based search, where Google is now playing," she said.
She said as search becomes more sophisticated, users will be able to search not only for videos but for specific words within videos.
$865M on social network ads
Another big trend will be advertising on social networks. EMarketer forecast U.S. advertisers will spend $865 million this year on social network advertising, up 147% from $350 million last year.
Google's deal to supply search technology to MySpace will help drive ad spending on social networks, as well as the growth of niche social networking sites, eMarketer projected.
David Blum, executive director of the online marketing division of Butler, Shine, Stern & Partners, San Francisco, said user-generated content as an ad platform will be a trend to watch in 2007.
"Companies that have tried to control how their brands are being discussed and debated online have paid the price," Blum said.
"You'll see the inclusion of users in online advertising, blogs, user feedback, beta programs and other kinds of input."
Blum said another online ad trend for b-to-b advertisers this year is more targeted and relevant advertising.
"Rich media ad units will provide more interaction in real time, so advertisers can provide more targeted advertising to users," he said.
For example, Butler, Shine is now working for a travel client, which Blum declined to name, on a campaign to provide real-time advertising based on user profiling and online behavior.
"The client will be able to maximize inventory and push last-minute deals through banner ads, which will serve as a transactional unit," he said.
Blum also said the line between advertising and entertainment will continue to blur this year, particularly with the release of Windows Vista and its reliance on desktop applications.
"With desktop widgets and personalized apps, there will be things that will entertain you and give you feeds to other information that really have nothing to do with products or services, but will help advertisers stay top of mind," he said.
Widgets (which Microsoft Corp. calls "gadgets") are customizable miniapps, providing users with instant access to news, weather, sports and other information.
"Widgets not only enable advertisers to stay top of mind but also provide a rich platform to have ongoing dialogue with customers," Blum said.