Predictions for the Future? Let's Not Forget the Present
At the same time, I worry about the thinking of an industry that worries about its future as much as ours does. Yahoo!'s chief sales officer, Wenda Harris Millard, gave the afternoon keynote at the Jupiter Advertising Forum here in New York City yesterday. And her remarks made me think that she'd agree with me.
Although she certainly asserted bullishness about our industry, Millard essentially reminded the audience that we're not "there" yet, and that we still have much to prove, in terms of the value we provide marketers. Amen to that, especially coming so smartly from a person of her stature in this game. What other industry is so preoccupied with showing how great it's going to be and how quickly it'll grow when so many of its key audiences are not convinced about it yet? As Millard said, we have a lot of work to do.
Obviously, interactive still regards other forms of media from a lower perspective, looking up at the broadcast and print forms of media that we hope to cull budget from in larger chunks. This isn't what drove Forrester to project a $24 billion interactive ad market for 2003, back in 1999. That was more about placating avaricious venture capitalists than about looking at other industries, in my opinion.
I'd say that the projections provided by Jupiter this week are actually conservative. Online advertising will double by 2009? Why wouldn't it double in the next five years? Consider that it went from $2.1 billion in 1998 to $6.6 billion five years later, in 2003. And, it did this despite the Internet bubble bursting, despite analysts' projections about broadband penetration being overblown by as much as 100 percent, and despite an overall ad market recession.
Now, with our industry in a stronger place than ever, Jupiter's analysis pointed to some interesting factors that should drive this expansion.
Jupiter asserts that rich and streaming media should quadruple by 2009 - from a roughly $1 billion industry today, to about $3.8 billion. Again, looking backward from today makes this seem like a conservative projection, as streaming media technology has only recently caught up to slower bandwidth speeds, just as residential broadband is taking off. And rich media has only become a de facto standard on the major portals in the last year. How high can it go?
It can go pretty high, I guess. Let's see how the role played by the technology providers who are behind rich media will change in the next two years. Steep discounting for the major portals has been the norm for some time. And with the higher average bandwidth being enjoyed by so many consumers and in-video streaming becoming a larger factor every day, it's possible that we might see a return to real bullishness for streaming media.
Does this imply a back-to-1999 bullishness for streaming media? Jupiter's projections call for streaming media to quintuple in the next five years, to about $657 million from today's estimate of $121 million. Obviously these are not large numbers compared to rich media. But, what we might see is the kind of growth that analysts were calling for five years ago, when they thought that broadband was going to surge much more quickly than it did.
"In-stream video is a better format than streaming banners, a better opportunity, and better impression," said Nate Elliott, an associate analyst for Jupiter. "There's already an audience for in-stream ads, and sites haven't been selling against it because they want to keep their advertising to content ratio low. As major sites make more impressions available in the next few years, this inventory, and the amount of in-stream video will increase considerably."
As stories about the artificial inflation of paid search rates through irrational market forces and perhaps artificially diminished inventory have been making the rounds, I'm wondering what the obstacles will be to continued, sustainable growth in our industry, especially for the cooler technologies that will make users regard products more favorably.