Having recently discussed what I saw as the SEM industry’s most influential events ’06, I began noting some things that I expect to happen in 2007. While browsing eMagine’s blog earlier today, I was pleased to see Bill Gadless’ post discussing the increase in B2B’s online spending for 2007.
Before reviewing that information, let me preface this by saying that I expect 2007 to be an enormous year for the industry — hence my focus on 2006′s most influential events. Moving forward with that train of thought, let’s take a look at what Gadless discusses in detail:
The report cites Veronis Suhler Stevenson forecasts showing that online spending in the B2B category will rise 23.7 percent next year to $2.4 billion.
Still, that figure is dwarfed by print advertising among the top 100 B2B advertisers, with nearly four times the spending of online in 2005. Nonetheless, eMarketer says the Direct Marketing Association is predicting that 2008 is the year when online marketing efforts will become the dominant medium for B2B advertising …although it’s a bit hard to see how we get there from here quite that soon.
According to my quick math, that boils down to an increase $480 million. While it’s a hefty increase, especially over the course of just twelve months, it should happen even if just a few things develop quickly.
As a reader of the blog, I hope that encourages you to ask the simple question… Why? While I don’t have a crystal ball to show me the way, here are my thoughts on how it can take place…
Masterminds on the Move
2006 was a year of preparation where big names in the search industry moved on to bigger and better things — and sometimes, behind what were once enemy lines.
In February, Udi Manber left Amazon for Google. In April, Steve Berkowitz left Ask for MSN. Finally, in July a number of managers left Microsoft to dedicate themselves to Google. While these names may seem unfamiliar to some — just realize that these people were primarily responsible for ground breaking items in the industry:
- Manber created the Introduction to Algorithms back in 1989 and later became the CEO of Amazon and A9. Today, he’s a VP of Engineering at Google.
- Berkowitz is the former CEO of Ask.com and former President & COO of IDG Books. His work is responsible for Ask.com’s acquisition of Teoma, the success of IAC Search & Media and the organizing of the management team that turned Ask.com around into the second-largest pure search site on the Internet.
- The managers that left Microsoft (Martin Taylor & Vic Gundotra) followed in Kai-Fu Lee’s footsteps. While their contributions were large when with Microsoft — Google is more than committed to both of these men. Google reportedly offered Gundotra a year’s grace period to take his post at Google… Enough time for him to complete the non competition obligation of his MS contract.
These moves were made for a reason, and now Google is ready to burst. Mix in the purchase of YouTube for $1.65 billion — and I think we’re on the cusp of something huge here. I can’t help but think that these and other folks are sitting in their Google cubes ready to unleash a massive push towards video search and related advertising.
Is it enough to generate the $480 million dollar difference in B2B spending? My gut tells me that it can’t happen, because the general public will need time to adapt to video — so I’m going to trust it in this instance and say no, it can’t generate that much this quickly. It is however, one major piece to the puzzle.
Media Buyers Will Be Forced to Be More Involved
2006 was a year that forced media buyers to pay more attention to what was taking place when money was spent online. This past summer’s legal settlements on click fraud reminded us that despite their best efforts — this industry continues to have a dark side. Sadly, as the industry grows — so too does the efforts of those wishing to take advantage of the system.
Therefore, savvy media buyers will become more proactive with managing their online spending in ’07. With their best interests in mind, these buyers will heavily invest in statistical and analytical applications to maintain their sanity — and their jobs. In the case where there are firms involved (for management of PPC, SEM, link building, etc.) this will also result in higher fees for services, thus creating more opportunity for increased B2B spending in the service sector.
Again though this leads me to ask if this is enough to equate to a $480 million increase in spending. And again still, I would have to say no — not on its own — but it will of course be a factor.
Increased Opportunities Have Emerged
Finally, I see the number of new advertising channels helping to firm up an area for growth here in the B2B sector. We’ve seen major networks develop for contextual advertising like ReviewMe, PayPerPost, and soon — SponsoredReviews. In addition to these, a new form of online marketing has emerged: Social Marketing.
Social Marketing has already led to SMO, or “social marketing optimization”. Of course, if there’s optimizers offering the service — there are businesses committing the dollars to the purchase. While the true value of social marketing can be debated, the emergence of advertising opportunities in SM cannot be.
Conclusion…
To reiterate — I do not think that any one of these areas will generate the full increase in B2B spending that the reports had discussed. When combined together though, especially with any number of unforeseen developments in the industry — the possibilities do become very real.
Will it happen? While a bit clichéd, I’d have to say that only time will tell. I for one though, would not be surprised at all if it does.
