20 Answers (Part 1)

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The eponymous Jack Myers Report is a must-read in the traditional media world, and increasingly for those of us in the online realm. In addition to his daily e-mail and subscriber fax report, Jack is well known for buyer surveys that assess the relative strength and weakness of online and offline sales organizations. On March 21st, Jack published “20 Questions for the Online Advertising Industry.” In this special four-part edition of The Drift, we’ll take our shot at answering these provocative questions. Should any of our readers care to offer comments or additional insights, we’ll happily forward them to the Jack Myers Report. http://www.jackmyers.com/

Jack’s questions, in the order they were offered, followed by our answers.

1. HOW DO WE GROW REVENUES/BUDGETS FOR THE INTERACTIVE SPACE?

It’s an unfortunate time to use military analogies, but they seem most apt in dealing with this question. Many in the online advertising space have looked to groups like the Interactive Advertising Bureau and the Online Publishers Association to do the job through a combination of Air Power and Psy-Ops: do marketing and education on our behalf and usher in larger budgets and faster adoption of the medium. But the truth is that the mission can only be accomplished in house-to-house combat. Individual sites and networks will increase online spending by solving one problem at a time for one marketer at a time. For too long, we’ve lacked a meaningful level of engagement with major marketers.

Tactically, the approach to these advertisers should be rooted in a solid understanding of media function and strength. Much of the most compelling research that’s emerged has centered on the relative strength of online advertising within the total media and marketing plan. But too few online sales professionals feel comfortable enough with traditional cross-media planning to make the case. The traditional model of “TV for reach, print for focus, in-store for action” is decades old, and marketers know there are inherent media weaknesses and inefficiencies. In a recent edition of “The Drift,” (http://www.upstreamgroup.com/newsletter24.htm) I suggested that online may well be used to fill the role traditionally played by magazines within media plans, and that print budgets be tapped for future online spending. Not the only answer, but one that drew a lot of notice.

2. WHILE THE TIME CONSUMERS SPEND WITH THE INTERNET IS GROWING, THE GP BETWEEN THAT TIME AND BUDGETS SPENT ON ONLINE MEDIA HAS NOT NARROWED (15% OF TIME SPENT VS. 2% – 3% OF REVENUE). HOW DO WE COLLAPSE THE TIME IT TAKES TO BRIDGE THAT GAP?

It’s my opinion that marketers will reject media allocation that’s built around quotas, as well they should. We’d all love to have interactive budgets rise to 15% across the board, but it’s just not going to happen. Budget allocation is going to be driven by campaign goals and media planning imperatives. That said, there will be many brands and campaigns that will end up allocating far more than 15% toward interactive advertising. Trying to reach a teen or young adult audience, a business decision maker or any other light-TV viewers without a smart, aggressive interactive component is just throwing good money after bad.

The key to shifting dollars on individual products and campaigns is access to individual brand managers. And here – thankfully – there’s been a generational shift. Many of today’s brand managers are in their early 30s and have lived their entire adult lives with the web and e-mail. No major CEO or CMO of a leading brand is going to come out and say, “We’re doing it differently now.” But go down the line to brand managers and staff level marketing professionals and they know you really can’t get the job done without interactive.

3. COSTS-PER-THOUSAND HAVE STEADILY DECLINED. HOW DO WE AVOID THE CABLE TV SYNDROME THAT VALUES MASS AND DEVALUES TARGETING?

Important to have some historical perspective on this one. When you say CPMs have “steadily declined” it’s critical to ask “from where?” During the boom years, online CPMs were insane. Major portals actually conducted auctions for ad avails and sold-through massive deals that ultimately didn’t deliver consumers to the brands in a meaningful way. CPMs were never going to stay at the levels of the late 90s.

It’s also critical to differentiate your market segments. Two key differences between online and other media are (1) the endless supply of “inventory” and (2) the low price of entry for sellers. Too many ads, too many sellers. But I would argue that for high quality sites and for the major portals, the slide has stopped. CPMs are holding or even rising. I’ve described this phenomenon as “the Prime Time Internet” and it’s worth attention. Major advertisers DO care where their ads appear and who they buy from. This bodes well for the top end players, less so for the bargain basement sellers.

To your question about “targeting,” I think it’s important to acknowledge how much money is spent every year “targeting” 18-54 year olds. While some advertisers will undoubtedly come to the Internet to reach niche audiences and demographics, I believe that many more will spend here for two over-arching reasons. First, because there are simply huge swaths of consumers they can’t reach efficiently in traditional media. Second, because of the perceived efficacy of television – in particular the 30-second spot – will head into a free fall. Advertisers will begin to consider the Internet because it is inherently an attentive medium in a business where attention is the main currency. But don’t discount mass: until online can demonstrate critical mass in terms of reach, neither of these scenarios will play out particularly soon. Regardless of what advertisers may say about targeting, size does matter.

4. HOW DO WE ACCURATELY FORECAST THE EXPANSION OF CURRENT TECHNOLOGIES LIKE HIGH-SPEED, RICH MEDIA, AND INTERACTIVE TV AND ASSESS THE ROLL-OUT POTENTIAL OF EMERGING AND EVEN UNKNOWN TECHNOLOGIES LIKE 802.11a? PAST FORECASTS HAVE BEEN SO EXAGGERATED, SO HOW DO WE OVERCOME THE NATURAL BIAS THAT EXISTS AGAINST US?

Past forecasts have been so exaggerated, so how do we overcome the natural bias that exists against us? Not to be flip, but who cares? This may be a compelling issue to those who are selling the services and laying the pipe, but as a driver of online advertising adoption, it’s a red herring. To believe otherwise is to suppose that the people at Kraft, McDonald’s and Ford are timing the release of millions of advertising dollars to coincide with a given level of broadband penetration or adoption of a given technology. In my view, they’re not going to alter their buying behavior based on any of the technologies you mention.

There is, however, one technology that will shift the balance of power. The PVR or Personal Video Recorder. Whether it’s TiVo or some descendant brand, personal digital programming, time shift viewing and the zapping or extraction of 30-second spots will revolutionize the nature of TV advertising, and reshape thinking on consumer usage of all media. You can already see advertisers preparing somewhat for that day: product placement, advertorial TV programming. Look for the increased use of on-screen logos, crawls, announcer endorsements and more.

We’re on the brink of a seismic change in how media, information and entertainment are consumed. Broadband penetration and rich media adoption are important, but they pale in light of the larger issue. The web is a proxy and a testing ground for all the digital media that will follow.

5. HOW DO WE SIMPLIFY OUR MEDIUM? ONLINE ADVERTISING SOPHISTICATION REQUIRES A NEW LANGUAGE KNOW ONLY TO THOSE IMMERSED IN ONLINE BUSINESSES. GIF, JPEG, HTML, FLASH, EYEBLASTER, UNICAST, SHOSHKELES, EYEWONDER, ENLIVEN, BLUESTROKE (SIC), VIEWPOINT. THIS NEW LANGUAGE REQUIRES INTERPRETERS FOR ALL BUT THE MOST LEARNED.

This new language requires interpreters for all but the most learned. Like the mechanics of television or the workings of the printing press, the technology of Internet advertising will fade into the background and ultimately only the engineers will care to talk about it at all. It’s already starting to happen. But language and terminology can still be major obstacles to the mainstream marketer. By developing an understanding of traditional media models, ad units and measurement, the online seller becomes an effective translator. A straightforward organizational structure and a few simple metaphors can go a long way.

Send your comments and questions directly to Doug Weaver

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