Hitmetrix - User behavior analytics & recording

Dave Pasternack’s predictions for 2007

Predicting what’s going to happen in the year ahead is always risky, but I’m comfortable enough with the following six assertions to make them to the DM News audience. I can’t promise you that every one of these predictions will come true, but I’m confident that most of them will.

1. Ad agencies will continue to fiddle while Rome burns

The people who spend the lion’s share of money on advertising will continue to spend a disproportionate amount of their client’s money on untargeted media, not because it’s working for their clients, but because it’s the only way they know how to buy media.

In my opinion, the people on Madison Avenue are too ingrained in their habits to change their behavior, and the only thing that will change this is when these people retire and relinquish the reins of power to a younger crowd that understands the critical role that online marketing, particularly, search marketing plays in effective, integrated marketing campaigns.

This process will take years, and until it’s completed, marketers will continue to pay too much for media that does too little for them. Expect to see in 2007 the same mistakes that these agencies made in 2006: including spending millions of dollars on television spots without spending a few thousand dollars on search so that people driven by these spots can find their clients in cyberspace. It’s ridiculous, it’s a scandal, and it’s a shame, but I just don’t see things getting better anytime soon.

2. The SEO/SEM controversy just won’t die off

I’ve received more hate mail from my DM News article on SEO (http://www.dmnews.com/cms/dm-news/search-marketing/38695.html) than I can count. On this basis alone I can safely conclude that the great controversy over the objective merit of SEO won’t go away anytime soon.

Frankly, I really can’t fathom why so many people would take issue with what I believe to be very basic, sensible points, namely that SEO isn’t rocket science, that it isn’t something worth paying tens of thousands of dollars a month for and that it’s something that should be regarded as a core competency for any business claiming to have an online presence.

The fact that people continue to regard me as some sort of firebrand heretic is amusing, but it’s also troubling. Maybe if these SEOers spent a little less time chatting about me and a little more time paying attention to their clients’ needs, we’d all have more PageRank.

3. Direct marketing sensibilities will continue to rule the market

Accountability, transparency and real-time media management are all values that Direct Marketers have embraced from the get-go, and those practicing these values will continue to reap huge gains.

BTL (Below-the-Line) media expenditures will continue to rise, and direct marketers will continue to use search marketing to squeeze more value out of their online properties.

Still, as more marketers jump into search, competitive pressures will continue to make it hard for marketers to succeed without deploying best-of-breed automation systems run by smart, well-trained people familiar with all the pitfalls that unwary marketers can fall into.

4. The upfronts will limp along, but broadcasting’s chaos scenario will not go away

The demise of the Upfronts, that age-old ritual of the broadcasting industry, has been predicted for years, but I’ve learned that you can never underestimate the ability of institutional inertia, ignorance, and raw market power to delay reform.

For this reason I don’t think that the 2007 Upfronts will be an abject failure. Instead, broadcasters will walk away with about the same take that they got in 2006, after raising CPM rates again.

The E-Media exchange, that NASDAQ-like media buying exchange pioneered by former Wal-Mart CMO Julie Roehm, will actually launch, and it may get a bit of traction, but it won’t make much of a dent in the way that Madison Avenue does business.

We will, however, see the usual squabbling and after all the money is counted, we’ll probably see another round of cost-cutting by the networks.

This will result in more crummy reality programming, more lookalike game shows, and more willingness to let advertisers clutter up the airwaves with more commercials. All of these things will reduce the quality of broadcast programming, accelerating its painful slide into its inevitable and well-deserved graveyard.

5. Mergers and acquisitions in the ad industry will increase

There are enough smart people in mainstream advertising who understand that they run the risk of being disintermediated by Google unless they take some meaningful steps to add value to their agencies. We saw this truth realized in October when WPP and CBS took a stake in SpotRunner, an ad automation service, and we saw it again this week when Publicis bought Digitas.

Look for more big agencies to wake up to the fact that they can’t build the core competencies required to compete in the new media market: they must buy these competencies from others. Whether they’ll know what to do with their newly acquired properties is another matter entirely.

6. We’re going to have another major data breach

I was frankly amazed that AOL’s release of personal search queries from some 650,000 users didn’t make more of a fuss among the general public, especially among government regulators.

Sure, there was plenty of bad press about the incident, and a couple of people did get fired, but that was the end of it, and in my view, the whole behavioral targeting industry, including Google, which amasses terabytes of query data with no disposal date, dodged a big bullet.

I’m afraid that we’re going to see more data breaches in 2007, and when they happen, they’re going to make much bigger waves, especially now that the Democrats (who tend to pay a lot of attention to privacy issues) are in control of the House and Senate.

Mark my words: If we get another breach, we may all face restrictive legislation that will impose new, mandatory rules on how we conduct our business. It’s not something I particularly want to see but if we marketers can’t take care of our data, Uncle Sam certainly will.

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