Fred's views of "predictions" match mine, as does his prediction. In this post (where the comment stream is even better than the post), Fred predicts:
I wrote about this at the beginning of 2008 in my post CPM Rates Will Rise, They Have To (which means either I was exceptionally wrong or exceptionally astute), where I posited that high CPC rates (in SEM) and better targeting/technology will be the major forces behind a rebirth in display advertising. In any event, the comment thread in Fred's post was rich in opinion and dialogue, which led me to comment:
As I wrote last year, high CPC rates (SEM) and better targeting/technology will be the major forces behind a rebirth in display advertising. If you're a marketer seeing your bid rate for keywords exceeding $2 per click, the effective CPM rate you're paying is high. At .25% CTR, you're paying $5 CPM. At 1% CTR, it's $20 CPM. If you're paying $2 CPC rates , all you need is a measely .05% CTR to put $1 CPM inventory on par (which is what 83% of the inventory is selling for, and also 5-10x the price of most social media inventory these days)!
Display offers >25x more volume than search, and new targeting techniques for CPM ads will shift dollars back towards the display market -- assuming ad networks rise to meet the market opportunity. I think they will, slowly but surely. They have to, in order to grow their business.
I was very pleased to see his reference to the estimation that Google has over 1.3M advertisers -- I've been looking for that data. We've also seen at Others Online that display ads are the only advertising format to monetize social networks -- text ads don't work at all. So in order for display to make a big comeback, it has to cater to this long tail of advertisers. Which means to me there are three ingredients necessary to offering advertisers the performance of search:
- Targeting - Advertisers must have access to deep and more standardized targeting. Proprietary categories/channels/audiences are arbitrary and non-standardized. Keywords are the lingua franca of SEM and SEO, and everyone knows what they mean. In the absense of a search query, the targeting can only be based on context (targeting content) or affinity (targeting the person).
- Self-service buying - Long-tail advertisers want to dabble first with low $ amounts, and the friction needs to be taken out of the process -- they need to be able to place a buy in minutes, as they now do with AdWords.
- Ad creation tools - Indeed, part of the friction is the design/dev of the ad creative. Tools must make this as easy as creating/optimizing text ads.