This is the subhead for the blog post

OK, OK, I know everyone is doing these predictions. But its the holiday and there’s no new news anyway, so this is a great way to fill space. Plus, in a year, you can look back on this post as proof of my genius. Without further ado, and in no particular order:

1. 2006 will be the year of “cost per action” or “CPA” marketing. Think about it – Internet marketing has gone from sponsorship (1995) to CPM (1998) to CPC (2002). Publishers are taking more and more risk in exchange for more and more return for every action. The next logical step is CPA. 2006 is the year that people will go ga-ga over “performance marketing.”

2. There will be massive consolidation in the SEM industry. The PPC markets on Google and Yahoo are still highly inefficient, meaning that the price that is being paid for a click is often too high (too many bidders) but probably even more often too low (too few bidders). As the big PPC players created sophisticated search technology, and as blue chip advertisers begin to shift more money away from branding campaigns towards direct marketing campaigns (like search), the price of most clicks will increase. Companies without technology and optimized bidding strategies will see severe margin compression. Small SEMs that rely on manual processes and their innate intelligence will no longer be able to get the job done for big spenders. The result will be a lot of acquisitions and a lot of bankruptcies too!

3. YPN will have strong growth. YPN is the “Yahoo Performance Network” – Yahoo’s equivalent to Google AdSense. Simply by being an alternative to the black box that is Google AdSense (what’s my rev share? I have no idea) will propel many sites toward Yahoo (again, Yahoo as an underdog, amazing!). This should also result in Google aggressively increasing revenue sharing and being forced to disclose more information about how AdSense works (which they have already started doing, albeit slowly).

4. Local search will *not* explode. Local search and mobile search are two areas that people have been touting for years and have yet to do anything, as far as I am concerned. Both of these are still at least a year away before there is any traction (aside from venture funding traction, of which there is plenty).

5. Google Video Search will become a cash cow thanks to amateur porn. Think about this – what if you were a young woman and you wanted to make a video of yourself with your web cam. Now what if you could have this video indexed by Google and get paid a revenue share everytime someone watched your video and then clicked on an ad beside the video (or better yet, what if you could just charge on a CPM basis). This could be the “democratization” of porn – and big money for Google.

6. Nextag will get acquired or go public. Every other comparison shopping site has been purchased already (Shopping.com, ShopZilla.com, MySimon, etc) so they have got to be next.

7. LookSmart will get acquired or de-listed. I just don’t see how this company stays afloat . . .

8. Google Base will never come out of beta – not in 2006, not ever!

9. A search engine will buy an ad during the Super Bowl (2007). This will be the ultimate in hypocrisy, considering how much the search engines have criticized brand marketing for years.

10. There will be a flurry of “how to” books on search engine marketing. These will be available in the same section of Borders that contains the “how to start an eBay business” books.

That’s my list. Check back in 365 days – I figure if I get at least 4 out of 10 right, I’m doing pretty well!