RealTime IT News

Can Online Ads Survive 'R' Word?

SAN FRANCISCO -- Online media organizations pondered the prospects for Internet advertising growth during a panel discussion. The consensus: cautious optimism.

The best-case scenario put forth during the ad:tech conference here this week, was that interactive advertising would continue to suck dollars from traditional media. However, a lack of standards and measurability for newer online media, such as digital video and social networking, continues to slow the movement of dollars from the largest advertisers.

The Interactive Advertising Bureau, a trade organization, estimated interactive advertising revenues at nearly $6 billion in the last quarter of 2007 -- before the mortgage meltdown and credit crunches really hit.

WashingtonPost.Newsweek Interactive, the digital arm of the two print publications, has seen "advertiser reluctance" in the financial services, travel and classifieds categories, according to Jennifer Moyer, COO, and she expects more decline in revenue from auto advertisers. Nevertheless, she said, "Marketing legend says that in a recession, marketers move dollars from traditional outlets like television, where it's more difficult to measure, onto Web advertising, where [prices] are lower and the measurability is much higher."

But, while digital certainly continues to bite off bigger and bigger chunks of marketing budgets, major advertisers, such as Proctor & Gamble or GM, won't transfer huge portions of their budgets from traditional media to online until they can analyze and compare the two, according to Curt Hecht, executive vice president and chief digital officer for general manager of media agency GM Planworks/Starcom Mediavest Group.

"Digital media is good at behavioral insight, but not attitudinal," he told the conference audience. "Consumer packaged goods clients want both. If I spend $20 million on Yahoo over a year, I want to know what did I do for my clients' products over that time? As more dollars flow in that direction, clients will demand to know."

The popularity of social media and user-generated content further muddies the view for advertisers, he said. "If a marketer launches a new product and creates a conversation around it, how do you pull that into traditional measures? That's a huge unknown."

While video content is growing rapidly, agencies have difficulty placing ads there because of a lack of standards for not only measurement but also in the players or delivery mechanisms, Moyer said. "The industry overall hasn't moved fast enough to put in place a set of standard, so publishers like ourselves invested in creating our own standards. Once universal standards are promulgated, it will cost us time and money to move to those standards."

The medium also could use more creativity from agencies, according to Todd Teresi, senior vice president of the Yahoo Publishers Network. "Putting TV commercials online doesn't take advantage of online video." Innovations like clickable ads, which let the viewer click to watch and possibly interact with the ad and then be transferred back to the same point in the video, are a better way to engage consumers, he said.

Mobile advertising is less developed than online media, but it too suffers from a lack of standards. Jeremy Wright, global director of mobile brand strategy for Nokia Ad Service, said that because most advertisers are still testing the medium, it could be the easiest thing to cut when budgets shrink. Only a few people raised their hands when he asked how many were working with mobile advertising.

On the other hand, he said optimistically, a recession was likely to make advertisers rethink habitual spending patterns, and then cutting underperforming traditional media. "And once those cuts are made, we won't see spending go back," he said.

Hecht of Starcomm said his agency's clients are still in the "what should we be doing with mobile?" stage. The answer: Make sure that the data that flows into mobile search is correct. "When clients feed their data, having your address and location correctly appearing on the phone has nothing to do with serving an ad, but it's very important," he said during the panel discussion.

While Nokia operates a mobile advertising platform and network, the company isn't advising advertisers to make big mobile advertising plays either. Instead, Wright said, they should do simple things like creating a simple mobile site that's accessible by all devices. In other words, he said, "What comes first is determining how mobile can make a difference."