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1) Continuing trend from 2006, advertiser behavior will continue to change pushing DOWN ad prices, but overall ad expenditures will increase.
2) Continuing trend also that it will continue to become more and more difficult for new adsense publishers to do well (I believe Jane Doe mentioned this elsewhere).
3) Marginal quality sites will become less and less profitable.
4) People who have done well with marginal sites that cater to adsense and not users will have a really really bad year. Without proper alternate income streams, some of those people who have done ok so far will crash and burn.
5) Any effects of competition from YPN/MSN won't appear until at least mid 2007, but probably won't be much of a factor in 2007.
6) Tweaking and testing will be less and less effective over time. It will be clearer that the best way to do well over time in adsense is to build good sites, follow the general guidelines google supplies, understand google's business model, and follow the spirit of their suggestions.
Overall, even better sites will earn less per click, while poorer sites will collapse. That's probably not a bad thing for the long term. Tweaking, putting images to deceive, all that jazz will simply end up as less and less effective.
Advertiser behavior has definitely changed this year, which is expected as the industry matures. The shakeout on the ad side started this year (2006), just as shakeouts occurred in other internet ads earlier on (e.g. banner ads). The effects of that trend will become obvious in 2007
Add yours? (Please try not to hijack this thread. Stick with your predictions and that would be real good)
CPA will increase including direct CPA to IP phone ( and the CPA may well be 10 to 20 cost of current CPC )
Additional add unit options will be offered
Google will clamp down heavy on MFA'a
Google will try new type of contextual add matching based on keywords for selected publishers ( possibly news type sites in the beginning )
Y and MSN will still be fluffing around until 2008 when they may become a true competitor for Adsense and they will then cherry pick potential partners which will only effect G bottom line by end 2008
The number of big corporates putting more into adwords / adsense will increase forcing mum and pop to drop out ( good example is the increase of adds from major car manufacturers using adwords / adsense ) through the big advertising agencies ( and landing page Quality Score will only apply to those G wants it to
One realy big player will launch it's new product through Adwords / Adsense creating PR buzz worth far more than any other means ( new car model / new IPOD etc. )
G will increase it's market share of advertising even further and may well decide to increase it's % take very slightly as it no longer needs to buy audience ( Pile it high and sell it cheap untill you dominate market ) ring any bells MS Office etc.