• Mediaweek, Tuesday, January 6, 2009 12:30 PM

This year is going to be a rough one for brand advertising, according to a new report from JP Morgan Chase. The economic downturn has created a climate in which performance-based advertising will grow at an even faster rate than it has compared to brand advertising in previous years.

The report, "Nothing But Net: Outlook for Global Internet Stocks in 2009," notes that performance-based advertising has steadily gained share of total U.S. online advertising dollars over the past five years. This year, search is set to increase by 10% to nearly $16 billion, while graphical ads, both performance-based and branded, will increase by just 6.3% to $8.4 billion.

"In 2009, we believe the display advertising market will be very tough and face declining CPMs and search will still likely be a winner," the report says. Among the losers is online video, which has been cited as a strong spot in the U.S. ad economy before. JP Morgan Internet Analyst Imran Khan points out that online video has yet to establish a sustainable business model, and advertisers have "failed to understand the consumer demand." They also want to reach big audiences through "brand safe content," which sites like YouTube can't always guarantee.

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