Commentary

Google, IAC, ComScore Among Deutsche Bank Top Internet Picks

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Google, IAC/InterActiveCorp, comScore, MediaMind, Amazon.com and GSI Commerce are named as Deutsche Bank's top Internet picks for 2011.

The report released Tuesday by Deutsche Bank suggests Google, IAC, MediaMind and comScore should benefit from a brighter ad outlook, while GSI Commerce should benefit from higher online ad commitments from its retail clients. Amazon.com remains a consistent growth story, with incremental revenue coming, in part, from the ereader Kindle.

This year should shape up pretty darn good for online advertisers, led by a continued shift from budgets moving from offline to online, as well as the explosive growth in emerging ad formats such as mobile, social and online video. The influence of Facebook and group buying also should make brands happy this year.

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The report suggests online ad spending will increase 11% year-on-year in 2011. Large advertisers will likely continue to pick up momentum through 2011, adding small and medium-sized businesses to the tail when ad spending increases as economic conditions get better.

Search will grow 12% in 2011, driven by continued strength in search volumes and moderate gains in CPC pricing. Explicit core search volume has grown above 10% year on year per month from June to November, indicating a strong momentum heading into 2011. A stabilizing macro environment combined with a more dynamic auction market should lift CPC rates higher this year, according to the study. For instance, Deutsche Bank analysts conservatively forecast Google CPC rates to rise by 5% in 2011.

Deutsche Bank analysts believe Google appears poised to "enjoy a much improved year in 2011 against fundamentals and the share price." In the 15 months since Google linked AdWords to DoubleClick and launched the display Ad Exchange (AdEx), the company has shown surprising growth.

Display advertising should increase 13% in 2011, surrendering some growth to emerging ad categories like mobile, social and online video.

U.S. consumer spending should also increase by 8% in 2011, as a result from the push by offline retailers to aggressively market their products in online stores. These multichannel retailers will get more aggressive in pursuing online market share.

The report also anticipates strong growth from local and group buying companies and that mobile commerce should gain acceptance by the end of this year.

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