Analysts are predicting large growth in 2008 in the U.S. graphical ad market, and expect the biggest winner of the bunch to be Yahoo. JP Morgan forecasts an $8.6 billion industry in 2008, which is an increase of about 20% over 2007. The average CPM is also expected to increase by about 4%.
The catalyst in the graphical ad market this year is not just increased interest in such ads. Rather, with higher CPMs and a tight ad inventory in other media, advertisers will be forced to look more towards the online world to fulfill their marketing goals. The 2008 Presidential election is expected to eat up a lot of the local broadcast and cable ad inventory, which will push more advertisers in the direction of the web. Additionally, JP Morgan Analyst Imran Khan expects that newspapers will continue to see declines in circulation, and therefore, more advertising dollars bleeding over to the web.
It’s not just the likes of Google, Yahoo, and MSN – all of whom sell online advertising – that will benefit from the increase in spending on graphic online ads. Web publishers will also benefit, and analysts are predicting that they will improve the monetization of their inventory through improved targeting, as well as migration to ad exchanges and sites like social networks. Improving your CPM by even just a few cents can have a pretty big impact on your total revenues.
As far as the online ad sellers go, JP Morgan named Yahoo as one of the “greatest beneficiaries of improved graphic advertising trends” in their 2008 Global Internet Outlook conference call on Wednesday. Yahoo is predicted to capture 10% of the $20 billion global graphical ad market, while MSN will get 7.2%, AOL 5%, and CNET about 2%.
According to the analysts, however, Yahoo’s success with graphical ads this year will depend on whether or not they can leverage the right media ad exchange, as well as increase their number of strategic partnerships.