Well, the year is coming to a close, and it seems like a good time to look back on the major trends of the year in our industry. When I do, two major things stand out:

1. Industry Consolidation

2. Government Enforcement Actions

Industry Consolidation

Merger and acquisition activity in the marketing industry increased exponentially in the first half of 2007, surpassing the pace set during a record year of deal making in 2006. Companies involved in the marketing services, marketing technology & digital content and commerce sectors announced 208 transactions totaling $34 billion in aggregate deal value. As recorded by marketing industry focused investment bank, Petsky Prunier (“PPLLC”), total deal value rose by 134 percent over the first half 2006 value of $14,6 billion and exceeded the $28 billion of record deal value for all of 2006 by 21 percent.”

While the final reporting for the year isn’t yet in, acquisition announcements continued at a rapid pace all around the world. When the final numbers are in, I expect that we’ll see an industry that continued it’s consolidation at a rapid pace. Due to regulatory hurdles, several of the major deals of 2007 will actually culminate in 2008, making the coming year into another big one for industry consolidation.

Government Enforcement Actions

The FTC and the state Attorneys General got in on the action this year, investigating, and sometimes even prosecuting affiliate marketers. Government agencies as a whole cracked down hard on misleading “incentivized” online advertising. The most notable settlement in this regard was Azoogle’s $1,000,000 settlement with the Florida Office of Attorney General.

The regulators also cracked down hard on online gambling here in the U.S. Following last year’s passage of a law making it illegal for banks and credit card companies to make payments to online gambling sites, this year the government continued its crackdown.

Just announced today, Microsoft, Google, Yahoo are paying fines to settle a government probe into their role in promoting online gambling dating back to 1997. Total fines exceed 31 million dollars.

"These sums add to the over 40 million dollars in forfeitures and back taxes this office has already recovered in recent years from operators of these remote-control illegal gambling enterprises," said US Attorney Catherine Hanaway.

The regulatory agencies have definitely stepped up their pressure on affiliates and those who facilitate or host the flow of advertising. No longer satisfied with going after the advertisers alone, the government has pushed liability along the advertising chain with great success. We should expect to see this trend continue well into 2008 and beyond.

Overall, 2007 has been a great year for the online advertising business. The industry has continued to mature, technology has improved, and standards are being enforced more consistently. Investment money continues to flow strongly, consolidation has only strengthened the heart of the industry, and it looks to be a good year ahead.

I hope you all had a great business year, and I wish you the best for 2008!