In a sign that the recovery
isn’t as solid as it might seem, AOL announced that it was
cutting 4% of its workforce. That too is understandable as
shares, since the merger, have lost 60% of their value, the
company having come back but not fully. AOL, though, is
still arguably the largest and most profitable internet
company, and their recent projections for 2004 speak to
that. Working in a space where companies who earn $10
million monthly seem enormous, AOL’s one billion dollars
yearly in online advertising revenues becomes hard to
imagine.
The internet advertising
industry as a whole has had a remarkable year. Most reports
show growth occurring at a minimum of 15% for 2004. Many
companies in our space saw growth well beyond 15%, with 200%
not being unreasonable. And gross online ad dollars spent
should equal if not exceed the record levels hit in 2000 of
just north of $8 billion. For 2005, that number could reach
more than $9 billion dollars.
Hard to believe that four
weeks from now, we’ll be in 2005, in less than three weeks,
most business will come to a standstill for the days between
Christmas and New Year’s Day. Even though the year is almost
over, most people in the space seem to have too much work to
do to focus on next year. Almost all to whom I’ve spoken,
expect their business to grow in 2005 but don’t seem to be
throwing out any projections. Unlike researchers and
analysts, those doing the work rarely have the luxury of
stepping back to assess the macro trends. The numbers become
important facts but not factors.
It would be nice to predict
the shape of next year, to be able to see the next big move.
Each year seems to have a surprise, but when viewed with
half-closed eyes, these big changes appear more iterative
than initially believed. Certain trends will most likely
continue into 2005 such as Dell, Hewlett Packard, and IBM
being among the biggest spenders with LowerMyBills
continuing to challenge Orbitz for king of reach and breadth
of display ads. Rich media, wireless, contextual, and
behavioral advertising will still command much of the buzz.
Several of the more prominent companies in our space will
either merge, be purchased, and/or go public. Search
advertising will continue to attract attention along with
affiliate marketing as more companies continue to place an
emphasis on targeted, results-oriented traffic. Contextual
marketing companies will begin offering even better
applications for users as they invent even more integrated
ways to show ads. Additionally, there will be many studies
and continued arguments for online advertising as a branding
medium.
All of the above predictions
are well and good, but the majority of them do not mean much
with regards to our day-to-day work. We have leads to
deliver, registration paths to build and support, and sales
to drive. We know in general some of the areas that will
provide growth, but we are more apt to wait and see,
focusing not on developing the next big thing but rather
putting ourselves in a position to act.
It is fun to think
academically about the areas of growth, and to wish for a
prosperous new year. Granted, the end of this year brings
with it optimism that certain years past did not have, but
in the end, those of us in the performance space pay our
salaries and those of our employees by earning money one
lead at a time. We would not mind if a company wanted to
spend five million dollars per month on a rich media buy,
but we won’t hold our breaths for that to happen either.
As mentioned in countless
articles and referenced here, all signs point to a good year
in 2005. For the performance marketers, the only difference
a new year brings is how easy it is for us to market. If we
stop marketing, we stop making money. A good year means more
places to market, more opportunities to market, no
legislation, and greater acceptance for what we market. With
that said, no matter what vehicle you use to market, here’s
to a good year. May all your leads come true.
Jay Weintraub
