Brand managers may talk about the value of online engagement, “conversational marketing” and other Web 3.0 virtues, but at least one Internet analyst firm says this will be the year they hunker down and seek proven performance on the Web. JP Morgan Securities has put out an annual “Nothing but Net” stock report for several years now, summarizing the prospects for a number of the most popular Web stocks and in the process commenting on what will do well on the Web this year.

The 2009 verdict from JP Morgan analyst Imran Khan: Search marketing will dominate the online marketing space because it’s built on a performance-based, pay-for-play model. Most of the audience-based media that have seen so much innovation in the last few years—notably social networks and Web video, but also display ads sold on the traditional cost-per-thousand basis—may be in for some lean times.

As for mobile marketing… well, to paraphrase “On the Waterfront”, this ain’t your night. Or year.

In the report Khan cites the fact that performance-based ads have been taking more an more market share away from CPM Web marketing for the last five years. This year, Khan predicts, U.S. search ad revenue will grow 10% to just about $16 billion. That’s way off last year’s growth pace of 23%, but at least it’s still in double digits.

By contrast, Morgan is estimating that U.S. display ad revenue will increase only 6.3% this year to $8.4 billion. That’s much lower than last year’s 16.6% expansion; and even there, Khan says, the increase may all come in the second half of 2009, when Morgan expects the economic picture to stabilize.

While all types of advertising will see fewer dollars this year, Khan posits that search will undergo fewer cutbacks than spending in other online and offline channels. “We believe the weak macroeconomic environment has forced adverttisers to test performance-based search advertising at an accelerated pace,” he writes. “Even after economic strength returns, we think advertisers will stick with their new allocations based on better metrics and higher measurable returns.”

For display ads, tough times may create the right environment to foster behavioral targeting. You can amass lots of page views, but the chances are most of those are wasted on visitors who don’t care about your ad. If advertisers could be assured their ads were being shown to people disposed to be interested, they would be willing to pay more–as much as 15 times more than for a non-targeted ad.

That price premium will put Web publishers front and center at any of the Congressional or regulatory hearings that seem likely on the ethics of behavioral targeting. It will also build interest in the fate of online ad networks such as NebuAd and Phorm that do “deep-packet inspection”– essentially watching you through your ISP to see what your interests are, albeit anonymously.

Meanwhile, Khan is bearish on the next twelve months in two online marketing channels that have been particularly hot in the last year or so: social network and online video. Social networks saw tremendous growth last year both in membership and in time spent on the sites. ComScore estimates that the totality of social ents in the U.S. saw almost 10% year over year increases in unique users and minutes online in the first nine months of ‘08. But those stats were much higher for the leading networks Facebook and MySpace.

Far from being fads, these networks fill a user need, Khan writes. They let people stay in touch with current friends, re-connect with old ones, make new connections and share content easily. What’s more, they offer both convenience (automatic news feeds to monitor friends without bothersome contact) and security (no one can contact you unless you agree that yes, they are a friend.)

Great for users. But for marketers, social networks still offer enough challenges that the spending outlook for 2009 looks weak, the report says. The social net audience still skews heavily young among both visitors and intensive users, so brands taking aim at anyone over 42 don’t see them as a vital channel.

Advertisers may also continue to shy away from placing their brands around content they can’t control, Khan says. And since creating a successful campaign in a social network is usually more complex than simply extending existing marketing into Facebook or MySpace, brands may opt simply to pass on the channel.

As a result, social nets may have to look for revenue from something other than advertising, Khan suggests, looking at everything from selling virtual goods users can pass to one another (flower bouquets, for example) to charging someone, developers or users, for those apps that are now free.

“We do not see a highly profitable advertising model solution for online video publishers in the near term,” the report says. Again, that’s not due to the audience size: Users pent 16.5 billion minutes watching video on the top 10 Web video sites in September 2008–a staggering 5% of all the minutes spent online doing anything that month, according to comScore.

Rather, the weakness in spending for online video ads this year will be the result of their reliance on the CPM model, which has little appeal for direct-response marketers. Meanwhile brand marketers are still going to be put off by the lack of a broadcast-style upfront model to guarantee audiences, and by the quirky environment in which their ad could appear near a popular YouTube video such as December fave “Wal-Mart Employee Trampled to Death?!?!”

Brand managers may talk about the value of online engagement, “conversational marketing” and other Web 3.0 virtues, but at least one Internet analyst firm says this will be the year they hunker down and seek proven performance on the Web. JP Morgan Securities has put out an annual “Nothing but Net” stock report for several years now, summarizing the prospects for a number of the most popular Web stocks and in the process commenting on what will do well on the Web this year.

The 2009 verdict from JP Morgan analyst Imran Khan: Search marketing will dominate the online marketing space because it’s built on a performance-based, pay-for-play model. Most of the audience-based media that have seen so much innovation in the last few years—notably social networks and Web video, but also display ads sold on the traditional cost-per-thousand basis—may be in for some lean times.

As for mobile marketing… well, to paraphrase “On the Waterfront”, this ain’t your night. Or year.

In the report Khan cites the fact that performance-based ads have been taking more an more market share away from CPM Web marketing for the last five years. This year, Khan predicts, U.S. search ad revenue will grow 10% to just about $16 billion. That’s way off last year’s growth pace of 23%, but at least it’s still in double digits.

By contrast, Morgan is estimating that U.S. display ad revenue will increase only 6.3% this year to $8.4 billion. That’s much lower than last year’s 16.6% expansion; and even there, Khan says, the increase may all come in the second half of 2009, when Morgan expects the economic picture to stabilize.

While all types of advertising will see fewer dollars this year, Khan posits that search will undergo fewer cutbacks than spending in other online and offline channels. “We believe the weak macroeconomic environment has forced adverttisers to test performance-based search advertising at an accelerated pace,” he writes. “Even after economic strength returns, we think advertisers will stick with their new allocations based on better metrics and higher measurable returns.”

For display ads, tough times may create the right environment to foster behavioral targeting. You can amass lots of page views, but the chances are most of those are wasted on visitors who don’t care about your ad. If advertisers could be assured their ads were being shown to people disposed to be interested, they would be willing to pay more–as much as 15 times more than for a non-targeted ad.

That price premium will put Web publishers front and center at any of the Congressional or regulatory hearings that seem likely on the ethics of behavioral targeting. It will also build interest in the fate of online ad networks such as NebuAd and Phorm that do “deep-packet inspection”– essentially watching you through your ISP to see what your interests are, albeit anonymously.

Meanwhile, Khan is bearish on the next twelve months in two online marketing channels that have been particularly hot in the last year or so: social network and online video. Social networks saw tremendous growth last year both in membership and in time spent on the sites. ComScore estimates that the totality of social ents in the U.S. saw almost 10% year over year increases in unique users and minutes online in the first nine months of ‘08. But those stats were much higher for the leading networks Facebook and MySpace.

Far from being fads, these networks fill a user need, Khan writes. They let people stay in touch with current friends, re-connect with old ones, make new connections and share content easily. What’s more, they offer both convenience (automatic news feeds to monitor friends without bothersome contact) and security (no one can contact you unless you agree that yes, they are a friend.)

Great for users. But for marketers, social networks still offer enough challenges that the spending outlook for 2009 looks weak, the report says. The social net audience still skews heavily young among both visitors and intensive users, so brands taking aim at anyone over 42 don’t see them as a vital channel.

Advertisers may also continue to shy away from placing their brands around content they can’t control, Khan says. And since creating a successful campaign in a social network is usually more complex than simply extending existing marketing into Facebook or MySpace, brands may opt simply to pass on the channel.

As a result, social nets may have to look for revenue from something other than advertising, Khan suggests, looking at everything from selling virtual goods users can pass to one another (flower bouquets, for example) to charging someone, developers or users, for those apps that are now free.

“We do not see a highly profitable advertising model solution for online video publishers in the near term,” the report says. Again, that’s not due to the audience size: Users pent 16.5 billion minutes watching video on the top 10 Web video sites in September 2008–a staggering 5% of all the minutes spent online doing anything that month, according to comScore.

Rather, the weakness in spending for online video ads this year will be the result of their reliance on the CPM model, which has little appeal for direct-response marketers. Meanwhile brand marketers are still going to be put off by the lack of a broadcast-style upfront model to guarantee audiences, and by the quirky environment in which their ad could appear near a popular YouTube video such as December fave “Wal-Mart Employee Trampled to Death?!?!”