When Ad Dollars Return, Where Will They Go?

Soleil media analyst Laura Martin claims that tens of billions of ad dollars will shift to new media forms in 2009. While most big media companies are betting that online video and social networks will be their most bankable future assets, Martin argues that video games and mobile platforms will do better.In an analysis of industry sectors likely to benefit as the economy shows signs of improvement, Martin concludes: “Advertising in video games is nascent but seems to be one of the best combinations of growing user time combined with strong monetization opportunities.” Martin suggests that Apple’s iPhone may become the mobile platform of choice and “may become the platform that advertisers prefer.”

“It’s moving to mobile and video games faster than anybody thinks,” Martin told ADvers. “And the investors are underestimating the speed at which it will move to those platforms.”

Her analysis has some bad news for social media players. Social networks have been a “surprise on the downside” for monetization, she writes in an August 20 note citing Google’s inability to meet the minimum payment guarantee to News Corp. since agreeing to a deal that had the search giant selling ads on News Corp.’s MySpace. Advertisers, she says, have been put off by the nature of the content and the risk that their ads will appear opposite something risky: “They’re unwilling to tarnish their content.”

While everyone views online video plays such as YouTube and Hulu to be the next killer apps, Martin adds, “the platform has proven difficult to monetize and even more difficult to make profitable.” And while she thinks new dollars will flow to online video, she points out that Google has said it hasn’t begun to monetize user-generated content (revenue tied to premium content, meanwhile, has tripled over the past year, Google says).

Separately, Interpublic’s Brian Wieser, global forecasting director at the firm’s Magna unit, says paid search will be a huge beneficiary of shifting ad dollars. He pegs growth rates at 3.6% this year and 10.7% in 2010. “Search will continue growing,” he said, though beyond Google the players are few: Microsoft, Yahoo and AOL.

“The continued growth of direct media, search continues to meaningfully outpace other media. Inside of the more traditional media, cable continues to see out performance,” says Wieser, who adds that it’s important to draw a distinction between mobile marketing-which is huge business and encompasses such things as applications-and mobile advertising, which is still a tiny business. “Political dollars will be a massive source of growth next year. It won’t illustrate the health of the media, but it probably won’t be a bad year for stations,” he added.