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Sizing Up the Online Media Biz

SAN FRANCISCO -- Marketers are skilled at putting a happy spin on virtually any sort of news, and perhaps that’s why the mood at ad:tech San Francisco, the interactive advertising and technology conference that took place here last week, was so upbeat . People seemed determined not to let the 900-pound gorilla in the room -- the economy -- get them down.

There was another gorilla, albeit a more svelte and less ominous beast than its global financial crisis brother, skulking around at ad:tech as well: it’s becoming very apparent that digital marketing will soon need to be able to prove its worth by delivering on its promises to provide vast amounts of actionable information to marketers.

Any hint that metrics or measurability methods would be discussed in an ad:tech session drew big crowds this year. One has to assume that if digital doesn't start producing anticipated results soon, marketers will be off to the next, great new thing -- or will perhaps start reevaluating whether old media is really as dead as recent reports of its demise has indicated.

But the general sense among conference attendees was that digital is the place to be and that digital marketing revenues are starting, ever so slowly, to recover real momentum, despite two dismal earnings statements from industry leaders that were released on Thursday, showing significant drops in online ad revenue.

Online-advertising sales for Yahoo’s (NASDAQ: YHOO) sites fell 10 percent last quarter, and Microsoft’s earnings statement posted the company’s first ever quarterly drop in revenue, in part credited to online advertising revenue dropping 16 percent.

But last week Google (NASDAQ: GOOG) executives told the Washington Post that one of the reasons the company turned in an acceptable quarterly profits report is due to advertisers shifting marketing dollars online.

"The undercurrent is that as soon as the general economy comes back, digital will be in great shape," said Andrew Ianni, chairman of programming at ad:tech. "And the digital spend is still growing, maybe only a few percent now, but all other media is declining and some significantly so … every single client and media buyer I've talked to says clients are moving more money in to digital. "

Ianni said roughly 9,200 people attended the conference, held at Moscone Center West, down about 8-10 percent from last year.

An upside to the downturn?

Ianni also believes that in the long run the downturn may help digital as marketers look for more efficient ways to market their products, and find new methods of delivering not only accurate measurements of digital marketing’s success, but ways of putting usable, monetizable data into the hands of marketers.

David Blumenfeld, senior vice president of strategy and business development at JWire, a mobile media marketing company that recently raised $11 million in a funding round led by Panorama Capital, said that the mood at ad:tech SF was "surprisingly good." Blumenfeld spoke at the "Tales from the Bleeding Edge - 7 Companies You Need to Know About Now!" session.

"People do seem optimistic; I don't know whether they are used to the fact that it's a down economy and are getting over the shock of it ... we've been in this lull for a while. It seems like people are getting past the 'woe is me' stage and coming to the table with lots of ideas."

Next page: It's a good time to increase spend