Predictions for 2006

While still on vacation in Florida I finally managed to get my 2006 online marketing predictions finished.

Online Targeting

Direct marketers have known for a long time that segmenting your audience using demographic information results in better conversion. Online advertising will be more effective in 2006 due to the implementation of behavior targeting and filtering technologies. Behavior targeting tracks a web user’s search queries and web surfing destinations and then serves up relevant banner ads or rich media ads on other search and non-search sites. Why targeting matters? Behavior targeting allows online advertisers to allocate more of their budgets towards their best customers. Web users only see those ads that advertisers want them to see and publishers get a higher yield on their search and impression inventory. Most major search engines are expected to implement some form of search behavior targeting in their paid search products in 2006.

Integration of Online Media

In 2006 we will see the merger of search marketing and brand-related interactive marketing such as display advertising and email marketing and perhaps the beginning of the convergence of the entire on and offline advertising industry. More marketers are seeing the benefit of integrated online and offline marketing campaigns through the use of consistent brand messages and visual appearance and are requesting those services from their search marketing and interactive agencies.

The Continuing Rise of Virtual Search

The trend towards specialized and vertical search will continue in 2006. Last year we have seen the introduction of specialized search engines in almost any major category such as travel, jobs, local search and new breed of shopping services the are capitalizing on the trend that most shoppers conduct research online for deals at physical stores in their neighborhood. Two of the most popular services in this category are Cairo and ShopLocal.

Major and local specialty search engines are continuing to improve the local search experience with maps, better business data and community services. This will accelerate the acceptance local search as a medium to find local products and services. The latest predictions for local online ad spending also point to continuing growth. According to Media Post, quoting the Borrell Associates 2006 Outlook report, the local online ad market will continue to grow at 40 percent this year.

Rich Media is Going to Take Off

Flash-based rich media advertising will become mainstream in 2006 for any type of compelling brand advertising while online video advertising will be everywhere. The introduction of Flash 8 with improvements in compression will make traditional Flash-based rich media production and ad serving easier. With over 50 percent of US household now having broadband access and watching streaming video on the web, online video advertising is ready to take off in a big way. One of the few drawbacks of online video advertising is that it is hard to solicit a direct response from the viewer. But new video technology, introduced last year by United Virtualities and others eliminates this obstacle. Other companies such as Pointroll and Eyeblaster have also introduced online video advertising enhancing technologies.

Click Fraud

PPC click fraud is becoming a major issue for the leading pay-per-click networks. The exact amount of click fraud is hard to predict but current estimates range from 10 to 30 percent of the fees charged to online advertisers depending on the competitiveness of the category. Search engines with pay-per-click advertising networks must make major attempts to address this issue in 2006 or they may face serious declines in revenue and stock values.

Blogging and RSS

The major content portals will take over and integrate the most successful blog networks, blog search engines and RSS feed readers/aggregators in 2006.