Predictions 2008

Related: 2007 Predictions 2007 How I Did 2006 Predictions 2006 How I Did 2005 Predictions 2005 How I Did 2004 Predictions 2004 How I Did Has it been a whole year? I posted my predictions for 2007 on Jan 1, 2007, and here it is, the first day of…

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Has it been a whole year? I posted my predictions for 2007 on Jan 1, 2007, and here it is, the first day of 2008, and here we go again. This year I am going to organize my predictions by companies (just the big ones) and trends. I’m focusing on advertising and search markets and the largest companies in that space, as that seems to be what’s on our collective minds these days, and it’s what I seem to have focused on in the past, as I read through my past prediction posts.

So what are the trends in 2008?

Well, everyone I speak to is very worried that we’re in for a major economic downturn, and we all know that a key lagging indicator of a recession is a serious downturn in the advertising markets. I’m going to buck all my colleagues fears, however, and predict that web-based advertising businesses will in fact enjoy significant gains in 2008. These gains, however, will not be evenly distributed. The markets will reward innovation and growth in new forms of advertising, and punish those who are seen as not having a strategy. (Recall that Google took off as an advertising business in the doldrums of 2002-2003).

This means it will not be an easy market for major public debuts. But we will see at least one, if not two new IPOs (for more see below).

2008 will also be seen as the year that proves Conversational Marketing as a new form of advertising (this is clearly a biased view), and by the end of the year, adding value to a customer’s life through marketing will be seen as a necessity as opposed to an experiment. This is the logical extension of the search marketing revolution to all forms of marketing, well beyond direct response and the fulfillment of declared intent.

2008 will be the year of integration indigestion for the majors, and as such, it will mean M&A will slow down for those companies. All those advertising-based acquisitions in 2006-7 will have to start to pay off, and the results will be uneven to say the least. For specifics, see below.

Another trend we’ll see is the continued erosion of the traditional mobile oligarchy. But despite the best efforts of Android, not much will get done this year. Don’t worry, though, by 2009, we’ll finally see a mobile web worthy of a serious development economy, one that looks a lot like Web 2 looked in 2005.

As for the Web 2 world, we’ll see a ton of venture funded companies go by the wayside. This is healthy and normal. It’s been a few years since the funding wallets opened, and it’s quite normal for companies that couldn’t get lift off by year two or three to close their doors. We’ll also see an uptick in acquisitions, as the boards of companies that that thought they were worth tens or hundreds of millions of dollars decide to settle for decent returns. This will be particularly true for media and advertising related businesses, who will find home at large media companies that are traditionally not eager to pay significant premiums.

Now, given these trends, on to the major advertising- and search-driven Web companies:

2008 will be the year Wall Street gets frustrated with Google. The company has incredible numbers, and will continue to impress, but analysts, tired of bidding up the stock, will start to question the company’s myriad ocean-boiling projects – after all, it’s merely trying to reinvent Health, Energy, Telecom, IT (both consumer apps and OSes), and a few other major portions of the GDP. Look for a few querulous analyst reports and even a few downgrades by the end of the year, as Wall Street finally comes out of its honeymoon stage with Google and demands that the company consolidate its control in marketes where profits are secure: Search and Adsense. Look for complaints about profits and integration (or lack thereof) with regard to Doubleclick, and at least one major product flop that gets analyst tongues wagging. Google will continue to struggle with its display advertising business, at least as it is traditionally understood, in part due to a culture conflict between its engineering-based roots and the thousands of media-saavy sales and marketing folks the company has hired in the past two years.

Yahoo, meanwhile, will spend most of 2008 trying to figure out what to do with what it bought in 2007, and attempting to articulate a strategy that is anything but “we have 500 million users, so we must be important.” By mid year, it will have succeeded, in part due to a clarification of its approach syndicated advertising (ie, how it will beat Google by delivering better than AdSense can to key partners). All the the big players in the advertising platform business – Yahoo, Google, AOL, Microsoft – are looking to monetize the magic middle of web traffic – high volume, but low CPM. Yahoo has access to a ton of this traffic, but in 2007 it couldn’t seem to figure out how to make it pay (more). Right Media, Blue Lithium, etc, are all plays to this (as are aQuantive and Doubleclick and Tacoda and Quigo and…) In 2008, Yahoo will figure out a promising start. This is critical, because Yahoo will finally admit to itself that in the battle between Microsoft and Google, it is an increasingly minority player, and will need to bulk up to compete. By year’s end, Yahoo will have combined in a major way with another third party, and it won’t be either of the two aforementioned companies.

In 2008, Microsoft will fail to gain much traction in anything that is Web related. This will frustrate Wall Street and Microsoft’s employees to the point of several key executive defections. Sound like last year? Yes, with one key difference. In 2008, Microsoft will finally figure out what do to with aQuantive, and by the end of the year, it will be clear what the company must do with it: Let it free. Yup, but this time, it will be as a public company that is majority owned by Microsoft, with fresh contracts to execute against MSN’s inventory, both owned and operated (O&O) and syndicated (Digg, Facebook, etc.). Yeah, I’m going out on a limb here, but what the hell.

Now, what about current media darling/punching bag Facebook? Ahhh, this is a tough one. First, the company will suffer from a serious identity crisis, as it realizes it must change its core DNA from tech- and founder-focused startup to media-focused Real Company with Lots of Employees. This is not a new story, Google went through it in 2003-2005. But not many companies make the transition without serious collateral damage. Second, the company will find itself stuck in the hell of pre IPO preparations, again, like Google in 2003-4. This will frustrate company leaders to the point of looking for a CEO whose job is, in essence, to talk to Wall Street. But until Facebook figures out a way to justify its lofty valuation, this hire will be stymied. In short, the most important short term focus for the company in 2008 will be solving for the Social Ads quandry. (By this I mean how to build the equivalent of a AdWords and AdSense for the “social graph.”) Though it will take promising steps, the company will fail to get it just right, at least by the end of the year and all by itself, but it will still find itself profitable and on the path toward an 2009 IPO. By mid 2008, there will be very serious rumors about an acquisition battle over the company between Google and Microsoft. But Facebook will play the middle, and most likely cut a deal with a third party, which despite the strong relationship with Microsoft, could well be Yahoo or a smaller but growing company that looks a lot like Facebook. Also, look for Facebook to make a run at NetVibes.

And AOL? As with aQuantive, Platform A will go public, if the markets allow (see trends). The rest of AOL will be sold or folded into Time Warner in ways that, regrettably, will finally signal the end of the original Case-ian dream.

Finally, what to make of Newscorp/FIM? Major problems will become apparent by early in the year, and those problems have to do with structure: Who is really in charge of “Fox Interactive”, and what does that mean? What about Dow Jones? There will be a battle for control over all of Newscorp’s interactive assets, one that will limit the company’s ability to execute any clear strategy. That said, MySpace will make a comeback of sorts, and look for it to cut a very important deal in 2008 with regard to its future. This could even be – yes I’ll say it – a spin out of the company as an independent public entity.

Well, that’s about it for now. I reserve the right to revise this a bit in the next week, as I’m still pondering this draft.

Oh, yes. I usually end with a prediction about my own work. Not FM, as I begged off that last year and will do the same this time. But as for my writing: I will be back at work on a book, at least a couple days a week, by mid year. This is simply too important for me to ignore, it’s literally a physical urge I feel now. 2008 will be the year it becomes real for me.

Again, to all of you out there keeping me honest and helping me think out loud, thank you. Here’s to a great 2008!

Update: Some interesting reactions at HipMojo and Mashable, thanks to TechMeme for pointing it out.

22 thoughts on “Predictions 2008”

  1. Also, look for Facebook to make a run at NetVibes.

    Good call.

    Netvibes has already been touting “importing” your Facebook Friends as a feature in their upcoming Ginger release. Because such a feature is a clear violation of Facebook’s Developer Terms of Service, I predict Facebook’s first swipe at Netvibes will be to C+D this feature.

    Reply

  3. Also, look for Facebook to make a run at NetVibes.

    I can’t believe they haven’t already. It seems like such a “no duh” extension of their platform. They’ll easily trump NetVibes too, because it’s way easier to graft a start page onto a social network than vice-versa.

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  4. John,

    I agree that “MySpace will make a comeback of sorts”. It needs to be a separate entity to regain it’s agility.

    “Also, look for Facebook to make a run at NetVibes” I am not so sure on this prediction.

    I predict we will see facebook Platform 2 that will open up facebook and change the way we look at social connections and reputation management.

    Thanks for sharing your thoughtful insights.

    Rodney Rumford
    http://www.facereviews.com

    Reply

  5. Wow, meaty and bold predictions. Except for the conversational marketing stuff which I still don’t like.

    But Right or wrong, you get my vote for Internet President. Good stuff John.

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  6. “By year’s end, Yahoo will have combined in a major way with another third party”, ok but who John? Newscorp?

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  8. Facebook’s social ads will be a huge flop.

    Social networking will prove to be another popular online activity that resists being monetized directly, like chat and email

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  9. I would agree with most of those predictions. can’t figure out why facebook would gun for Netvibes? Not sure Facebook won’t manage to figure out a way to monetize the social graph either. Maybe their current revenue growth will be enough to justifty an IPO.

    We added your predictions to our twitter account http://twitter.com/predictions08

    Reply

  10. John, I am sorry to say it almost appears as if you cannot see the forest for the trees. Let me start explaining my reasoning by listing the “Ads by Google” that were loaded when I just now arrived at battellemedia.com:

    1. How I Lost 55 Pounds

    Amazing Chinese Weight Loss Secret. As Seen on CNN, NBC, CBS and Fox News.

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    2. Discount Travel

    Deep discounts on major airlines. Discount web fares made easy!

    pagead2.googlesyndication.com/pagead/iclk?sa=l&ai=BPvHr-TJ7R43DE6H0nQOvq9X2AenM2DrlgM6HBMCNtwHAixEQAhgCIJK38wgoBTgAUMCn0sEEYMkGsgERYmF0dGVsbGVtZWRpYS5jb226AQoxNjB4NjAwX2FzyAEB2gEZaHR0cDovL2JhdHRlbGxlbWVkaWEuY29tL8gC8d_xA6gDAegD-APoAwToA2voAxD1AwgAAAA&num=2&adurl=http://ads1.revenue.net/c%3Fcreative_id%3D227862%26site_id%3D15007%26se%3DGoogle%26secamp%3DTriggersTravel001%2BCon-8%26ag%3Dsearch%26kw%3D%255Bone%2520stop%2520travel%2520search%2520engine%255D%2B%255B0102%255D&client=ca-federatedmedia_html

    3. 10 Rules Losing Belly Fat

    Lose 9 lbs every 11 Days with these 10 Easy Rules of Diet & Fat Loss

    pagead2.googlesyndication.com/pagead/iclk?sa=l&ai=BtXSn-TJ7R43DE6H0nQOvq9X2AZWR_yCx3tDfA8CNtwHgxQgQAxgDIJK38wgoBTgAUPKG7N0HYMkGoAG3yKf7A7IBEWJhdHRlbGxlbWVkaWEuY29tugEKMTYweDYwMF9hc8gBAdoBGWh0dHA6Ly9iYXR0ZWxsZW1lZGlhLmNvbS-oAwHoA_gD6AME6ANr6AMQ9QMIAAAA&num=3&adurl=http://www.review-and-search.com/4idiots/dietForIdiotsGHome.aspx&client=ca-federatedmedia_html

    4. Meet Sexy Singles

    Browse Photos Of Millions Of Users Find Ture Love Today

    pagead2.googlesyndication.com/pagead/iclk?sa=l&ai=BN_2h-TJ7R43DE6H0nQOvq9X2Aer0-jGy7e_YA8CNtwGgjQYQBBgEIJK38wgoBTgAUOeFlfT______wFgyQagAb72vvcDsgERYmF0dGVsbGVtZWRpYS5jb226AQoxNjB4NjAwX2FzyAEB2gEZaHR0cDovL2JhdHRlbGxlbWVkaWEuY29tL6gDAegD-APoAwToA2voAxD1AwgAAAA&num=4&ggladgrp=12302489161696932452&gglcreat=13936029983502810161&adurl=http://mum.digitalmoses.com/mum.php%3Fu%3D219263%26w%3D%5Bmm17_date15%5D%5Bc:people_finder%5Dgoogle%2520search%2520people%2520finder&client=ca-federatedmedia_html

    5. Find Sexy Girls

    Make an Instant Connection Find Sexy Singles near you

    pagead2.googlesyndication.com/pagead/iclk?sa=l&ai=Br5D3-TJ7R43DE6H0nQOvq9X2AZrDzkSWlK20BMCNtwGgjQYQBRgFIJK38wgoBTgAUKvQtM37_____wFgyQagAerYivQDsgERYmF0dGVsbGVtZWRpYS5jb226AQoxNjB4NjAwX2FzyAEB2gEZaHR0cDovL2JhdHRlbGxlbWVkaWEuY29tL6gDAegD-APoAwToA2voAxD1AwgAAAA&num=5&ggladgrp=201835785679885870&gglcreat=14125892768727105871&adurl=http://mum.digitalmoses.com/mum.php%3Fu%3D218725%26w%3D%5Bmm11_date31%5D%5Bc:find_people_2%5Dpeople%2520find%2520blog%2520search%2520engine&client=ca-federatedmedia_html

    Which of these are supposed to be useful to me?

    Are we engaged in a conversation here? What role do these messages play in the conversation?

    I can see that mentioning “Disneyland” may invoke the travel algorithm, maybe “growth” invokes the sex and/or diet algorithms — but how do these actually reflect the interests of your audience?

    You write: “Wall Street finally comes out of its honeymoon stage with Google and demands that the company consolidate its control in marketes where profits are secure: Search and Adsense.”

    I feel like Jim Morrison: “WAKE UP!!”

    There is absolutely nothing “secure” about dishing out diet pills as if they were somehow contextually related to search.

    If/When people do wake up, there will be very little that is “secure” in this model, and I expect Double Goo will be a dried-up ghost town, too.

    Look at your deal with J&J’s baby.com/pregnancy.com — is there any reason to doubt that this is prototypical of the kinds of deals that will increasingly be moving advertising spending to more focused conversational communities (instead of some more/less chaotic algorithm, based on “artificial something-or-other”?)?

    There are plenty of players who have had the foresight to see this coming — and it is a proven economic model that has been used for centuries now since Adam Smith first proposed it: specialization.

    I do not doubt that specialization and division of labor might not have some pitfalls, too — but when I see the adsense “writing on the wall” of your homepage, I see very little that is built on a firm enough foundation to be referred to as “secure”. Instead, it feels alot more like a “get rich quick” scheme — and that reeks a whole lot more like liquidation than anything else.

    I realize this somewhat “contrarian” viewpoint might be a little unpopular — but I also see no reason for such complacency when it appears to me that a storm is brewing. Granted, 2/5 of the top 5 results for a search on “pregnancy” are a wikipedia.org page about pregnancy and merely the pregnancy sub-domain of the about.com domain. Then again 2/5 of the top 5 results are pregnancy.org and pregnancy.com (and Google also presents some of its own “news” results as 1 of the top 5 results — let alone the image results and other extraneous information [whether “From medical authorities” or “Alternative medicine” or whatever] presented at the top of the page).

    I feel the far more important issues in need of more focus are the risks inherent in specialization — perhaps the aforementioned risks and/or pitfalls related to the phenomenon of so-called “echo-chambers” need to be investigated more?

    Reply

  11. No mention of Apple, I’d be interested to hear your predictions on where they are going in 08. Also, I think Linkedin may be one to watch, seems to me they are concentrating on building useful functionality into their app as opposed to Facebook’s mildly entertaining and often annoying offerings

    Reply

  12. “2008 will also be seen as the year that proves Conversational Marketing as a new form of advertising” … I believe you are right, however I see this as having a host of implications many of which we already see … a clash between what made social media popular (conversation) and a corporate mindset still steeped in closing a sale (marketing) … am I having a real conversation? or am I trying to sell you something? that’s a very fine line to tread and most companies aren’t that nimble … will add your predictions to my “juice bar” … http://www.jerrysjuicebar.com …

    Reply

  13. Long-time listener, first-time caller. It seems 2008 may also be the year that advertisers get super-frustrated with untargeted television advertising. Your DVR example from the book must be looking more and more appealing every day.

    This just in from the NYT:

    ADVERTISERS’ DILEMMA As ratings continue to sag for the major television networks, advertising rates are going … up?

    “Although it seems counterintuitive, it’s the law of supply and demand,” Holly M. Sanders of The New York Post reported this week (nypost.com). “As the TV audience shrinks, advertisers have to buy more ads to reach their target number of viewers. But that increased demand for ad slots creates scarcity, which in turn leads to rate hikes.”

    The situation highlights “the strategic blindness of advertisers,” according to Jeff Jarvis of BuzzMachine. To reach the people they want, advertisers have to “work a little harder and move past the one-stop shopping of TV,” Mr. Jarvis wrote (buzzmachine.com). “Actual work? Heaven forbid.”

    Reply

  14. I agree that online advertising will be the big thing in 2008, but not like you describe. I also predict the death of SEO and SEM as it is now.

    The big thing in 2008 is visual online search and marketing brought to web courtesy of http://clikitysplit.com– the world wide web’s first and only visual search & marketing engine.

    ClikitySplit is both the consumers dream come true (visual, fast, easy-to-use), and the advertiser’s magic bullet (powerful, rich multi-media visual marketing tools).

    ClikitySplit’s unique features include:

    · All relevant search results shown visually & simultaneously on an interactive map
    · Sorting by price, chain name, and type of cuisine
    · Advertising based on a “pull” model and delivered via ClikitySplit’s proprietary dynamic billboards
    · Extremely fast due to no refreshing of maps

    Add in no tacky, intrusive advertising, and you have one unique, fresh marketing model.

    ClikitySplit’s attractive visual aspects, speed, and unique features are a tremendous leap forward in technology from the tired static search result pages and pay-per-click business model. Seeing is most definitely believing! Using ClikitySplit is an online experience like no other.

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  15. I’m surprise that you didn’t mention anything about video.

    One thing I’m predicting is that we’ll see a big growth in online video communications. Text is fine and it’s here to stay but I think that with broadband taking hold companies like ooVoo.com (disclosure: a client) will do very well.

    Social media has been taking off as people wish to express themselves and interact with others. I think real time video based communications will take hold as people continue to integrate their lives with digital arena.

    Reply

  16. Your Clickity Split site is pretty cool, but why aren’t you using Google Maps instead of MS 🙂 I am working on a similar side project http://www.ratethegolf.com to locate golf courses, its still in alpha… adding mouseovers and reviews for golf courses shortly… nice article John, your predictions are really candid and the way you write, it makes them almost seem real as if they already happened!!!

    Reply

  17. Hi John,

    Happy New Year.

    I’m thinking, among much, that Aol will have to be real slow if it doesn’t play some part in the social-economy, it was there before the guys at myspace and facebook could walk, and just as it’s dropping the walls, they’re putting up fences!

    “Old” media companies will take advantage of the economic environment to buy tech./co.’s for integration, and prepare the ground for when their internet businesses aren’t separate entities left to tech-nerds.

    By the end of the year, we will have moved closer to ubiquitous computing and mercury-data (my term for access and usage of data that is the most trivial, personal and mashable from any nook and cranny cross-platform).

    Newspapers will start to gain the people, and see others working on proving it, to have the confidence that they will not be dead in 3 years time, though in some cases the media will have to be de-coupled from the medium. Technological efficiencies in new income, as well as production/sales efficiency’s will be better developed by those at the forefront, and integration by those companies with online classified and offline assets will be accelerated.

    It will be make or break year for the mobile network companies, will they have power and control, drive progress, innovation and ownership, or will they have the same profiles as any other dsl/bandwidth suppliers just taking “mundane” revenue.

    It will get bad for some “web 2.0” (sorry, still not love that term!) companies/start-up’s, but while the acquirers will have the pick of the bunch and the M.Y.G. or A. won’t be the ones that will take any flipped company, the economy won’t get so bad as bad ideas still won’t survive in the way y2k knocked out all such ideas in one go.

    It will get more acceptable with the apathy of the red-herring of obsessing over china and other such culturally conservative countries, that we in the G8+ (self-rightous west) will have limits placed on our own uses of what is either socially or legally acceptable in our use of the internet.

    The strain of certain events will make access to the internet seem as important as supply of energy by governments. One substantial (relatively, enough to be on the radar of the tech. crowd) event/company will fail in providing its services that will remind us of the need for service security, both in terms of data-backup and net-access.

    Most net-natives still won’t give a toss about copyright, and the established will give up unless they see optimism in something like a substantial legal fight.

    If P2p takes off for broadcast-networks net-distributed content, we will move closer to tiered internet pricing, and possibly limits on what can be sent, if not recieved; or those content-providers will need to pier and do deals with those cable/dsl suppliers.
    The price of broandband will have hit a floor in most parts of the world, instead prices will rise and differentiation will occur on service.

    Commerce for individuals will become so much more easier, with the same ease that blogging has brought to the web being (multi-platform) developed by someone.

    2008 will remain a year where rich media isn’t developed commercially, but work happening now will lead to some stuff in 2009; in the meantime, most users will still look to the main text search engines or directly in video silo’s for such content.

    Big news/international events will bring out the hackers, virus writers and viral video-makers.

    With the level of fragmentation, and yet familiarity of the net, and google losing it’s pr spin, and the mainstream media catching on to the doubts the tech.savvy have had with google, a whole lot of tryers will lead to google not necessarily being the first choice, a lot more competition and options, and it will take a lot more effort for anything Google does to either get free mega-hype, or ain actual market-traction, unless its quietly developed products that are allowed to grow organically. -which will also be how google changes its approach in parts.

    Apple will consolidate this year, but lay the ground for .mac to become a proper business.

    Facebook will not be IPO’d this year, unless its opportunstic. It’s valuation will be based on fundamentals with a proven business-model, rather than where it’s currently still finding its feet and can sell tomorrows air.

    Cable companies will work on consolidating the number of boxes, and some will open up their sand-boxed systems to compete with Tivo in content aggregation.

    There will be a lot more web-fragmentation, unlike pre-y2k, it will be realised (by large and small, though soc.net’s might be effected,) that you can survive by providing a good nuts-and-bolts service with a fraction of a fraction of any countries or verticals market-share.

    Ebay will consider exploiting the value of it cumulative user-base and data, maybe even a partnership with a company like Aol concerning a fully-fledged social network, but then won’t be up to the ambition.

    That’ll do for now.

    Yours kindly,

    Shakir Razak

    Reply

  18. Ads? What’s all this talk about Google and Yahoo! and who’s got the inside track to out-ad each other?

    Thanks to Firefox’s AdBlock Plus extension, I’ve seen perhaps a dozen ads in the past two years…and proud to say I’ve yet to click on even one in 13 years on the Net :>)

    Reply

  21. Interesting predictions. Your article may be correct for 2008 that online Advertisement may strong even with a slow economy. Google just posted a higher than expected earnings for the first quarter of 2008.

    Also, our company(www.cisframework.com) clients are increasing their budget for only advertisement and marketing. We are also experiencing a higher than expected sales volume for the first quarter of 2008.

    Irving Sarreal
    http://www.cisframework.com

    Reply

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