Performance-Related Ads Will Rule Long-Term, Predicts Seer - WARC News

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January 7, 2009

NEW YORK: Performance-based ads capable of delivering clear RoI metrics will rule the US advertising roost in 2009 and beyond, predicts JP Morgan haruspex Imran Khan in a penetrating insight into marketing efficacy that would not disgrace a sixth-grade business studies student.

And as if to underscore that Occam's Razor-like understanding of the marketing mindset, Khan foretells that this trend will continue through 2009 and into the ensuing economic upturn.

His report, Nothing But Net: Outlook for Global Internet Stocksin 2009, envisages the performance based US search-ad market will rise this year by 10% to almost $16 billion (€11.78bn; £11.02bn).

Whereas online display ads (performance related and branded) will grow only 6.3% to $8.4bn.

Khan also echoes the oft-voiced concerns of others as to the prospects for online video ads.

He posits that the likes of YouTube are in for a rough ride, primarily due to their reliance on CPM ad rates rather than performance based metrics such as cost-per-click or cost-per-action display ads.

Moreover, he says, online video can't guarantee viewership for any specific video as does TV in its upfront negotiations.

And given the unpredictability of popular videos, their varying quality and ongoing uncertainty over copyright, Khan's crystal ball doesn't see glittering prospects for the sector in the foreseeable future..

He does, however, see a glimmer of opportunity for a recent performance-based experiment by Google.

This enables online video viewers of, say, a music track, to click on a link that allows them to buy the music direct from Amazon or iTunes, with the video site taking a percentage.

Data sourced from WashingtonPost.com; additional content by WARC staff, 07 January 2009

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