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JP Morgan analyst sees grim 2009 for online video ads

January 6, 2009 — 12:28pm ET | By Pete Wylie

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JP Morgan analyst Imran Khans included a bearish forecast for online video advertising in his 2009 outlook report on global Internet stocks. Khan expects performance based adds to weather the economic downturn better than display ads, and since most online video advertising remains in the display model, he sees growth in the area slowing.

Khan believes online video advertising's reliance on CPM models will cause a "considerable slowdown." Could the online video advertising industry be headed toward the death Fliqz CEO Benjamin Wayne predicted?

Some indicators, such as the reliance on CPM as the standard of interaction, certainly would indicate a slowdown or death, due to the rise of performance-based campaigns. But what Khans fails to consider adequately in his report is the work of many companies to make online video just that, a pervasive, highly measurable ad format that can return fantastic interaction and brand lift rates. Jason Glickman, CEO of Tremor Media, has widely talked about best practices in online video advertising that can raise completion rates to guarantee ROI, and the success of advertising over online video professional content should continue into 2009 for companies like Hulu.

Look for the metrics companies to deliver interesting data that could give online video advertisers revolutionary insight into the consumers interacting with a particular piece of content for optimum ad placement. Also, while the "un-roll" ad format released last week by Blinkx may not be the "killer ad" for online video, expect innovation and experimentation with formats to produce performance based models to drive growth.

There is a glut of online advertising companies at this point, and consolidation and attrition are inevitable in this space. But the ads themselves, especially the ones served by the top companies that understand delivering ROI, should continue to drive strong growth in total ad spend around online video though 2009.

For more:
- see the paidcontent.org article on the JP Morgan report