eMarketer Makes 10 Predictions for 2007
Friday, 05 January 2007
The analysts at market research firm eMarketer present a glimpse into what 2007 holds for online advertising and marketing, e-commerce, and the world of emerging media. Below, you will find 10 key predictions for the new year.
eMarketer bills itself as "The First Place to Look" for market research information related to the Internet, e-business, online marketing and emerging technologies. eMarketer aggregates and analyzes e-business research from over 2,000 sources, and brings it together in analyst reports, daily research articles and the "eStat Database," a comprehensive database of e-business and online marketing statistics. Its information products help business executives worldwide make smarter, faster decisions about online marketing, emerging technologies, and e-business.
1. Online Ad Spending Will Hit $20 Billion
Total US spending on Internet advertising will reach at least $19.5 billion in 2007. According to eMarketer, this is 19 percent more than total spending in 2006. This rate of growth is sharply down from the 30 percent or more that has been the norm for several years. However, when you consider that all US ad spending will rise by a mere 1.4 percent in 2007, it is clear that Internet advertising remains a spectacular and very much ongoing commercial success story.
2. Some Money and Lots of Hype for Online Video Advertising
Internet video advertising will get more media play than dollars in 2007. eMarketer projects that spending on this format will total $775 million in 2007. To put this figure in perspective, remember that it represents only 4.0 percent of projected US online ad spending. Although marketers are increasingly keen on including video in their online ad campaigns, they will continue to face a shortage of appropriate premium placements.
3. Social Networks Are Set for a $1 Billion Windfall
Worldwide ad spending on online social networks should top $1 billion in 2007, up from an estimated $445 million this year. Fueling this growth will be factors such as international expansion, "niche" networks and Google's deal to supply search technology to MySpace.
4. Downloadable Games Will Get Hotter
Digital downloading of video games will take off in 2007, and by 2010 this distribution method will account for 22 percent of all worldwide game software revenue. Besides online stores pushing the new generation of games consoles, look for Time-Warner's GameTap service to position itself as the HBO of PC gaming, focusing on original content to drive its subscription service. Video-on-Demand (VOD) marketers may find their skills in demand for promoting these platforms, which play on subscriber taste for instant gratification via download.
5. Thirty-Seven Million Strong: A 'Minority' Bigger than Canada
The number of African-American and Hispanic Internet users in the US will rise to 37 million, from 35 million in 2006. This market will continue to grow faster than the total US online population for several more years, giving advertisers with the imagination to reach out to them, fresh opportunities. (The population of Canada is 33 million.)
6. Mobile TV Arrives
Mobile TV took its first baby steps in 2006 with professional content. The World Cup offered a first glimpse of what the broadcasting future for mobile might look like and in 2007, another crucial element will be added to the mobile-TV mix---user-generated content. Given the impact the Web equivalent of this development has had in 2006, advertisers and marketers are likely to face a dizzying array of new choices.
7. US B-to-C E-Commerce Will Cruise Past $200 Billion
US business-to-consumer online sales will comfortably pass the $200 billion mark in 2007, reaching a new record total, which eMarketer projects will be $223 billion. $132 billion of this will be online retail sales and $91 billion will be online travel. Some of the impetus for this growth will come from existing online buyers increasing their spending. A significant force driving online travel sales is the demand from travel-loving and relatively affluent baby boomers.
8. The Retail Power of Word of Mouth
The influence of consumer-generated content (CGC) on US consumers' purchase decisions will continue to grow in 2007. A recent study from market research firm Compete found that consumers were more likely to be swayed by CGC than by some of the information coming directly from brands.
9. Broadband Services Will Matter as Much as Speed
When broadband emerged it was distinguished from dial-up by its always-on nature and the greater bandwidth available to users. These characteristics were seen as reason enough to trade-up from dial-up. Now, however, broadband is about value-added services and driven by providers bundling voice, video and data together. Services such as voice-over IP (VoIP) are approaching the 30 percent penetration range. eMarketer predicts that one in four broadband households in 2007 will subscribe to a VoIP service and this will rise to nearly 40 percent of broadband households by 2010.
10. DVRs Pump Up TV Viewing
The alarmist claims that digital video recorders (DVRs) and video-on-demand (VOD) would cause the death of TV and the loss of billions of dollars worth of advertising dollars are increasingly looking just plain wrong. TV distribution and access are changing and audiences are increasingly fragmented. However, every challenge presents an opportunity. More people will watch more TV and video content in the future, not less. They will just be doing so in different ways – via the TV, the Internet, the PC and their portable devices. eMarketer predicts that VOD will be in 30 percent of US TV households by the end of 2007 and that DVRs will be in 30 percent of TV households by 2009.