20 Answers (Part 3)

On Tuesday, "The Drift" kicked off a special four-part edition aimed at answering columnist Jack Myers' ( http://www.jackmyers.com) "20 Questions for the Online Advertising Industry," which was published back on March 21st. In today's third installment, we take on questions 11-15.

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

11. How do we accurately forecast revenues and hold forecasters responsible for their predictions? Forrester predicted that online advertising revenues would reach $22 billion in 2004. Actual revenues may not approach one-third their forecast.

A great question. Forecasters of trends and financial milestones generally build up their reputation and expertise over time. The Internet advertising bubble of the late 90s - and the demand for visibility into the future - grew so quickly that it never gave the analysts a chance to get their feet under them. And let's be fair: Given the go-go environment of the time, were the Forrester people any less responsible than the financial analysts who drove up stock prices? What was their incentive to be cautious?

That said, I think there is a much better way to analyze the health of the market. We should come up with our own version of the Dow Jones Average. Look at the quarter-over-quarter performance of a dozen leading sites, networks, search engines, etc. Stop trying to predict one big number. If you believe - as I continue to believe - that advertising revenues are the real financial drivers of the online medium, then there should be a market for statistically sound projections built on top of this kind of data.


12. How do we understand how marketers balance between investing in their own corporate websites vs. investing in traditional advertising through online media?

This is a question that has huge implications for the real health of the business. Distinguishing between "above the line" media spending and "below the line" spending on site development and e-commerce infrastructure is critically important. Over the past several years you've seen a gradual shift by many marketers away from site building to a more distributed web advertising presence. But I'd still guess that there are seven or eight dollars being spent "below the line" for every one dollar that's being spent on "above the line" media advertising. How does this change? Not sure. But maybe the answer lies in the balance between creative costs and media expenditure offline. Perhaps there's the beginning of a model there.


13. How do we best understand, analyze, and exploit the key differences and similarities between online and other media?

As I've said before, the best first step is to stop thinking about online as a single medium. It's really several different media and communications platforms that all happen to traverse the Internet and reach you through your PC. It's TV, newspapers, the Yellow Pages and the phone system all rolled together. But I don't think we need a big new metaphor. Better, I believe, for the seller to ask, "What communications or marketing problem is the marketer trying to solve?" Then compare the available Internet solution to those offered by offline media. This has got to be done on a case-by-case basis.


14. How do we best package, communicate and market our competitive advantages and unique benefits as an advertising medium, and what are those benefits and advantages?

I'm not sure it's a case of "competitive advantages" and "unique benefits" that we should be making. The leaders in the online business are all thinking about integration within traditional marketing plans. The work that's being done within the IAB/ARF Cross Media Optimization Studies is a great beginning. But I caution both buyers and sellers to stop waiting for some grand moment of total enlightenment. It's not going to happen. The adoption of online as a core marketing vehicle will happen incrementally...but it will happen. The best sales organizations are making it happen today, client by client. They're focusing on "how" online can work as part of the total plan, instead of "why" it should have a bigger share of spending.


15. Should we focus time, energy and resources to attracting traditional advertising revenues through advertising and media buying agencies, or should we go after direct marketing and sales promotion budgets? What is the proper balance?

There absolutely has to be a dual approach. Given the relatively small amount of money that's being spent online right now, who can blame the big agencies for not spending zillions of dollars building their capabilities. Anybody who's going to make real money selling marketing solutions in today's market needs to be calling on clients and high-level agency personnel. Ad agencies are not going away, but their missions and strategies will change. Those who pay lip service to interactive media will quickly find themselves commoditized and marginalized. Remember that I'm looking at the web and e-mail simply as the first two major forms of digital media and marketing. There will clearly be many more. We may not be at the end of the past, but we're clearly at the beginning of the future

Send your comments and questions directly to Doug Weaver