Annual Predictions for 2009

My Predictions for 2009 as published in PM360 (published online later to show how I did when making my new 2010 predictions)

1) The economy will gradually begin to turn by year-end. Besides the obvious reasons such as housing, free-wheeling credit, over-leveraging, etc… this recession continues to be self-perpetuating. Even with feeling a firm bottom in 2009, we are likely to remain in an economic “funk” until we realize that life goes on, business gets done, opportunities still exist, and we collectively take chances to capitalize on opportunities.

2) Many unhealthy companies will disappear in 2009 (the government can’t bail out everyone). This includes all types of companies: online companies, traditional publishers, CME providers, and ad agencies. We should embrace this process and the lessons it brings. It’s capitalism at work.  It’s economically healthy.

3) Wondering if your company is one of the above? If so, you have a failed business model. The good news is that not all broken companies will go bust, some will reinvent themselves. In this category, are many of the same types of companies as above inclusive of hybrid online ad networks. A hybrid network both owns and operates its own web sites while also representing the ad sales of other web-sites—the former makes the latter impossible without conflicts of interest for both the advertiser and partner web-sites. This conflict will be readily apparent during recession.

4) Consolidation will be important. For companies with healthy balance sheets and access to credit, the world is on sale. Expect players like J&J and Procter & Gamble to make more strategic acquisitions than usual—partly because they can, primarily because it makes economic sense.

5) President Barack Obama will have his hands full on the economy and will not make significant progress on healthcare reform in 2009. While still a key talking point and 2010 priority, practicality dictates radical change is tabled for a year, probably longer.

6) Online measurement firms will stir things up, and a new firm will start measuring them. The growing choice of Internet traffic measurement firms includes Comscore, Nielsen, Compete, Quantcast, Alexa and more such as Google. Paid models must better differentiate themselves and provide more long-term value to media planners and publishers as free competitors proliferate.

7) The line between ad agency and publisher will continue to blur. In reinventing themselves, large broken businesses will continue to acquire smaller future-focused working businesses of strategic importance.  The blurring of business models will create a proliferation of serious (short-term) conflicts of interest—as companies struggle with identity crisis’. After acquiring aQuantive … What is Microsoft? Software company? Publisher? Ad agency? Ad Network? Search engine? After acquiring 247RealMedia and TNS … What is WPP? Ad agency? Market research firm? Ad network? Software company? Long-term, new company identities will emerge and many elements of former acquisitions will be shed in the name of focus.

8) Microsoft (and some combination of Yahoo) will continue to fight it out with Google in the search market place, but the larger focus will center on the use of technology to wring efficiencies out of the media buying process and ad operations (execution and measurement). The desire to “own” the entire media buying process will become the Holy Grail for both tech companies and ad agencies. Joining the fight, driven by self-preservation, will be the largest ad agencies that see either a Google or Microsoft controlled ad world as the greatest threat to their business survival.

9) Google will regain its focus. After investments in everything from space exploration to hybrid cars, Google will focus on search and advertising. Sporting an extremely healthy balance sheet, Google will increase efforts on focused acquisitions. A cultural shift is required to continue its rapid growth, and now makes strong economic sense.

10) Needing to achieve more with less, attain higher ROI, and with the loss of many tactics due to new PhARMA guidelines, pharma will spend significantly more of its ad budget online. It will still lag way behind other industries (probably by 40% or more), but the average pharma budgets will have double digit allocations towards online initiatives.