Healthy Growth in 2008 Online Advertising: JPMorgan
Posted by Ken Lauher on Wed, Jan 02, 2008 @ 04:55 PM
Momentum in the online advertising space is given detailed analysis today by JPMorgan’s Imran Khan in his report “Nothing But Net.”
As noted by Khan, strength in the online advertising sector is headed for the gas pedal:
“While we think CPM growth was relatively muted in 2007, we expect 2008 will see it accelerate, driven by several factors, including easier comps, better inventory sellthrough, behavioral and geographic targeting, and ad exchanges.”
In regard to the benefits to such ad exchanges as ADSDAQ by ContextWeb, DoubleClick’s AdX Ad Exchange and RightMedia, Khan states in his report:
“Ad Exchanges have emerged as an efficient solution to these new challenges [inventory growth] and are gaining traction to alter the landscape for selling and purchasing display advertising inventory.”
PaidContent.org’s Joseph Weisenthal highlights some of Khan’s additional key points:
“80 percent of online inventory currently sells for $1 CPM, suggesting it wouldn’t take much to see improvements. As a corollary, internet traffic is aggregating, via acquisitions and partnerships, into fewer hands, which could give publishers more pricing power. Meanwhile, offline ad inventory is expected to be low, in part due to political spending on TV, pushing more advertisers towards the internet.”
According to Joe Mandese, MediaPost Editor, Khan reaffirmed his top Internet stock picks for 2008 which include shares of Google, Yahoo, Expedia, Omniture, Shutterfly, and Monster.com as “overweight” recommendations. And no wonder - with predicted earnings of Internet companies growing more than four times faster than those of the overall stock market during 2008, why wouldn’t you invest?
-- Ken Lauher