Fearful Buyers, Laggard Technology Hurting Industry

LOS ANGELES — Lack of usable tools and a preponderance of risk-averse
clients have become some of the industry’s biggest hurdles, said a panel of
online publishing and agency executives speaking here at the @d-Tech
convention.

One of the more recent criticisms of the online ad industry stems from the
fact that advertising formats vary wildly throughout the space, making it
difficult for agencies’ creatives and buyers to develop multi-site campaigns
and media plans. According to a recent NetRatings
study, more than 7,000 formats exist.

But panelists charged that buyers’ uncertainty over how best to utilize the
Internet, coupled with the fact that little campaign planning goes toward
the online channel, ensures that there’s little in the way of format
standardization and evolution in the space. Yet the fact that buyers
haven’t caught on doesn’t mean that the industry hasn’t been vocal enough —
instead, panelists said that agencies’ fear over current economic conditions
discourages trying new things.

“The whole point of an effective market is we serve what there is demand
for,” said Ken Goldstein, executive vice president and managing director of
the Walt Disney Co.’s Disney Online. Despite the fact that
billboards have lower action rates than banner ads’ clickthroughs, “people
have been buying outdoor for some time, and I don’t see it dropping off
anytime soon.”

“It’s an economy of fear right now, and there are not a lot of risk takers
in organizations,” he said.

Added Avenue A President Clark Kokich, “their opinions are colored by what
they think is acceptable to middle management. You can risk your job or
just do the same thing as last year.”

Contributing to agencies’ reluctance to test large online ad spends is that
much-lauded, interactive rich media ads have yet to take off, panelists
said. While many believe that tracking the variety of interactions that
consumers can have with rich media ads could prove the format’s value to
buyers, the technology remains unperfected.

“The technology and thinking are a little ahead of the marketers,” said Lon
Otremba, executive vice president of interactive marketing at AOL Time
Warner’s America Online. “It requires a lot of back-end
work and technology, which marketers like in concept but find a little
difficult.”

Mediasmith media director David Smith said that the first time his agency
launched a fully-tracked Flash campaign for an advertiser, “it cost more
money to put together a tracking solution than the entire ad … we’re
looking for solutions from technology providers.”

While strides are being made in combining third-party, campaign-wide ad
serving data with user-side demographic data (provided by researchers like
comScore and NetRatings), vendors again are dropping the ball by not yet
having tools in place to leverage that information. The panelists said that
despite the effort to create reach and frequency metrics for selling
online inventory — similarly to offline media — the system flounders when
it comes to actually delivering multi-site campaigns based on the
same metrics.

“The ad servers are not ready to handle an individual campaign based on
views, on a certain frequency,” said Smith, who’s also chair of the
Advertising Research Foundation’s committee on reach and frequency.
“Publishers … don’t have publisher-side tools available [to manage
inventory allocated to reach-and-frequency-based buys]. We need a whole new
algorithm. And … the Fortune 500 advertisers, year to date, are spending
less than they did last year to date. This is a problem, folks. We can’t
have the curve go this way. We’ve got to get these tools out there.”

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