Clicking into the Future: Predictions for 2007

SiteProNews: December 27, 2006 Feature Article

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Clicking into the Future, Predictions for 2007
By Jim Hedger (c) 2006

While 2006 was a great year for webmasters it was a time of
great change and challenge in the search engine sector. The most
notable trend from 2006 was the continued advancement of Google
against natural rivals Yahoo, MSN and Ask, as well as its
persistent movement towards other, less obvious advertising
venues. Next week we will look back at the ghosts of 2006 but as
the New Year approaches, thoughts turn towards the spirits of
things to come.

Predictions for 2007

1/ Google's early entry to radio advertising will bear fruit
prompting Google to start examining television advertising.

When it comes to the allocation of advertising dollars, Google
fundamentally altered the rules of the game. In the past, mass
market advertisers would gamble on a shotgun approach to
ad-spending. The options consisted of newspaper, magazine,
telephone directory, radio or television. While each medium
could provide statistics showing their print-run and audience,
tracking the success or failure of these types of advertising
has always posed a problem for manufacturers and retailers. When
Google popularized the pay-per-click model in which advertisers
only pay when a person actually views the ad, a new model was
born.

Google's billing model will have to alter slightly to meet the
radio and video formats however, as digital radio and television
becomes the norm, tracking will become far easier. Google will
be able to charge by the listener or viewer though it remains to
be seen if listeners or viewers will actually listen to or view
advertisements on digital radio or television.

2/ A consortium of major newspapers and publishers will form a
consolidated advertising group to combat Google. The initiative
will fail.

In 2006, Google literally sucked much of the money out of the
pool of resources shared by publishers on or offline. With its
venture into newspaper advertising, Google has threatened the
classic golden goose of traditional news publishing, the
classified ad section. News gathering organizations, already
reeling from a loss of advertising income to other facets of the
online marketplace should band together much as several airlines
have to reduce cost and difficulties booking tickets. The
newspapers and magazines could easily promote local, regional,
national and even international advertising opportunities at a
much lower cost than they could individually. If they can band
together to undercut Google's costs is another question however
they will either figure out how to collectively raise
advertising income or they will become Google advertising
affiliates.

3/ Congress will initiate an open investigation of pay-per-click
advertising models.

We already know of closed-door congressional inquiries into the
PPC market. Stemming from the AIT vs. Google case, we have
learned of FBI and Secret Service investigations, and in-camera
hearings before congressional committees. We also know of at
least two republican and one democratic senators interested in
opening further investigations.

How this one plays out is a mystery, but it will likely play out
this year. Thus far, the investigations have been kept behind
closed doors, a silent testimony to the strength of Google's
lobby effort in Washington DC. No matter how talented and
strenuous the lobby, an investigation of Click Fraud will be
made public sometime this year.

4/ An investigation of pay-per-click advertising models will
threaten Google's stock values.

Hence the strong lobby effort. If common sense doesn't threaten
Google's stock values, the threat of congressional oversight
will.

5/ Google will drop below $450 before the end of first quarter
2007. If Google drops below $425, watch for a major landslide in
California.

The market is softening. With expected slowdowns in the housing,
building, manufacturing and retail sectors, tech investors are
showing signs of skittishness going into 2007. The first part of
January is traditionally a time when the market readjusts to
decisions made by investors in the last weeks of December. Many
sell shares towards the end of the year in order to clarify
their incomes for tax time. This year, a number of analysts have
advised clients to unload some of their Google shares as a hedge
against an expected downturn in share values.

While Google remains far above the $450 range, expect it to drop
to around $450 by mid-March. It's earnings to assets ratios are
way too extended and though it has better prospects than any of
its competitors, the search advertising market is changing
rapidly. The only thing that saves Google from dropping is
rapid entry into the television advertising market. The first
signs of a weakening AdWords market will be the catalyst of the
first round of a Goog landslide. If the share prices hit $425,
watch for major selling. If it goes below $400, buy a boat.

6/ Yahoo will find focus and direction.

Having freed itself from the sticky peanut butter mess it found
itself in late 2006, Yahoo has made the first steps towards
reorganizing their messy organization. The battle between
Hollywood and Sunnyvale has been settled with the geeks coming
out on top of the agents. This year is Yahoo's year to stage a
serious comeback or to languish into obscurity. I suspect the
former. However, all the major algorithmic search engines will
face a new challenger this year.

7/ The major search engines will face a new and socially adept
competitor this year.

Wikipedia founder Jimmy Wales has hooked up with Amazon to
produce a human-powered search engine that will be released
sometime in 2007. This collaborative effort to dethrone Google
will be moderately successful. Wikisari will quickly become one
of the biggies, but Google will still be king.

8/ 2007 will be the year Internet marketers discover the power
of online video.

The use of video will become a standard component of online
communication. Advertisements, long-distance conferencing and
public relations in general will be affected. The advancement of
video online will set the stage for a major realignment in the
traditional entertainment industry.

9/ DIY Infotainment Distribution for fun and profit.

Using tools like the Yahoo Publisher Network, YouTube, Flickr
and distributed podcasts, webmasters and private websites will
start to replace professionally developed network broadcasts as
an information and entertainment source.

Add efficient monetization to the mix through Yahoo Search
Marketing ads and you have an effective enticement for
adventurous webmasters to try entering the market.

10/ YPN will see challengers this year.

While the Yahoo Publisher Network is by far the most advanced
program of its kind, expect to see other search entities
introducing their own webmaster friendly monetized information
and entertainment distribution programs.

11/ The search marketing environment will further fragment with
the following sectors seeing:

Stronger gains: Video, Social Networking, Niche marketing, Vertical search

Weaker margins: Traditional domain-driven SEO, Small-scale PPC

12/ Changes to the SEO Billing Model

Many traditional SEOs will be forced to adopt PPC style billing.
Fees will be charged based on the success of a campaign as
opposed to flat fees charged up front or on a monthly basis.
Greg Boser has written and commented on this several times, most
recently in a conversation with WebmasterRadio's Daron Babin on
the last Rainmaker show of 2006.

13/ Consolidation in the Search Marketing Sector

In 2007, financial pressures faced by firms in the SEO part of
the search marketing industry will produce a sector that looks
very different from the one we work in now. Watch for
consolidation between allied SEO, SEM, Public Relations and
link-building firms as clients demand full-service vendors.

14/ Hasty La Vista

Early Microsoft Vista users will eat a number of worms, catch a
bunch of viruses and end up as Zombies. As a result, savvy IT
departments put off the update until Microsoft can prove it has
created a master-patch.

15/ Patch This Microsoft

That big patch will be ready for download in 2008, effectively
delaying the rollout of Vista for another year.

2 Bonus Predictions

16/ Duke Nukem Forever

Duke Nukem Forever will be noted as the greatest game that never
was.

17/ Planet Fortune

Webmasters will have more rewarding opportunities this year than
ever. 2007 will see the fruition of several major initiatives
started in 2005 or 2006 such as the YPN, online video
advertising, and the combination of on and offline advertising.
With the largest public relations and marketing firms in the
world taking serious note of search, the search marketing
industry will be truly considered part of the mainstream ad
industry. This will empower webmasters as more attention, energy
and assistance is directed towards helping webmasters present
interesting content framed by increasingly expensive
advertising. There is a lot of fortune to be found online this
year and much of it will trickle down to the grassroots.

2007 is going to be an intense and interesting year. Next week,
we'll take a look at how I did in my 2006 predictions.
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Search marketing expert Jim Hedger is one of the most prolific
writers in the search sector with articles appearing in numerous
search related websites and newsletters, including SiteProNews,
Search Engine Journal, ISEDB.com, and Search Engine Guide.

He is currently Executive Editor for the Jayde Online news sources
SEO-News (http://www.seo-news.com) and SiteProNews
(http://www.sitepronews.com). You can also find additional tips
and news on webmaster and SEO topics by Jim at the SiteProNews
blog (http://blog.sitepronews.com/).
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