J.P. Morgan’s internet predictions for 2009

Several compelling issues were noted in J.P. Morgan’s Nothing But Net 2009 Internet Investment Guide that could impact the way B2B and life sciences companies approach their marketing campaigns. They include:

Performance-driven advertising should continue to rise

B2B publishers will begin accepting online advertising that is based on a pay-for-action model such as pay-per-lead, pay-per-registration, etc. (Tiziani Whitmyre’s TW Networks division is achieving success lining up these publishers for clients across a wide range of markets.) That means much more efficient advertising buys and very little waste.

Challenges in monetizing Web site traffic should persist

B2B publishers continue to struggle with monetizing their Web sites. This will open up opportunities for performance-based advertising (see above). We are finding that publishers are more open to creative forms of online advertising and are beginning to be flexible in considering non-traditional approaches.

Social networking needs a new revenue approach

While traffic at social network sites (Twitter, FaceBook, LinkedIn, YouTube) is exploding, traditional ad-based models have not generated sustainable revenue and profit growth. This is driven by advertisers’ inability to measure any value derived from social network marketing. J.P. Morgan suggests that social networks must move to performance-based advertising, ecommerce, and the sale of virtual goods to enhance the monetization of their huge visitor numbers.

Global paid search revenues will climb 12% in 2009

While down from a breathtaking 34% growth rate in 2008, J.P. Morgan predicts global paid search advertising will continue its expansion in 2009. In addition, the number of search queries is expected to increase by 24% over last year. However, look for somewhat lower keyword bid costs as advertisers decrease their budgets in the coming months.

Online video strategy does not appear to be working

The successful use of video in the B2B marketing world will continue to be problematic. The issue appears to be a Web site’s inability to guarantee viewership for any specific video the way television does in the upfront model. Often, it is very unpredictable as to which video will be popular. We are advising clients only to use video in online campaigns on a pay-per-view model.

The mobile market is long-term interesting, but near-term challenging

While 84% of Americans are using cell phones, only 15% are using mobile Internet services. And advertising on small screen mobile phones is challenging. But as business people continue to embrace smart phones and higher speed networks, the opportunity eventually will exist to reach B2B audiences using mobile marketing technologies.